Telkom shares jumped 8% in morning trading in Johannesburg on Wednesday after the telecommunications group surprised with upbeat earnings.

The shares were trading at R25.48 as of 9.21am, up nearly 8% from Tuesday’s close of R23.60. This was after Telkom said it expected its basic and headline earnings to rise by at least 20% year on year in the six-month period ended 30 September. It will publish its interim results next week. Update: The shares retraced much of their earlier gains through the rest of the day, eventually closing up 1.9%.

“The increase in earnings is due to improved performance by the group for the period, with both revenue and Ebitda growth within guidance provided at the annual financial results presentation for the year ended 31 March 2023,” it said. Ebitda, or earnings before interest, tax, depreciation and amortisation, is a measure of operating profit and is a closely watched financial metric in the telecoms sector.

Growth in earnings will also be positively impacted by lower depreciation after asset impairments recognised in the prior financial year, Telkom said. “This has been partially offset by higher net finance charges in the first half of FY2024 as well as the non-recurrence of a R102-million gain on foreign exchange and fair-value movements recognised in the first half.”

Total depreciation, amortisation and write-offs decreased by about 20% while net finance charges increased by some 50%, largely due to lending rate increases as well as a higher net debt balance.

Telkom has also been forced to restate its headline earnings per share (Heps) for the first half of the previous financial year due to an accounting error that led to a R21-million overstatement of headline earnings (4.3c Heps). – © 2023 NewsCentral Media