Start-up costs associated with Telkom’s new mobile arm, 8ta, have eaten a R1,1bn hole in Telkom’s operating profit in the financial year to 31 March 2011.
It’s also taken a R739m hit related to employee severance packages. The losses have been partially offset by a lower tax rate as well as tax concessions.
Telkom, which is expected to publish its annual results on 13 June, expects reported headline earnings per share to be between 55% and 75% higher, largely as a result of the sale of its stake in Vodacom. Normalised headline earnings per share will fall by between 25% and 45%.
The group has also updated shareholders about its dispute with Helios Towers in Nigeria, which is casting a shadow over its plans to sell the wireless arm of that country’s Multi-Links to rival Visafone. Helios claims the sale can’t go ahead and is suing for more than US$250m in damages.
“Multi-Links has, on 20 December 2010, initiated a civil action against Helios regarding the validity of the master lease agreement,” Telkom says. “The matter has been heard and judgment is expected on 7 June, or soon thereafter.”
The group says Helios brought a counter application against Multi-Links on 23 December last year, in which it, among other things, requested an interim status quo order to keep the status of the parties’ positions in terms of the contract intact for an interim period). “An interdict against the sale of Multi-Links’s assets and a claim for damages in the amount of $252m relating to a so-called ‘anticipatory breach of contract’,” Telkom says.
“The interim status quo order was granted to Helios in December 2010 but, in terms of Nigerian court rules, expired seven days after it was granted. The court refused the interdict preventing the sale. The damages claim of Helios has not yet been heard. Certain cost orders have been awarded against Helios. The parties are still continuing to perform in terms of the master lease agreement and the contract has not been breached by Multi-Links.”
Telkom says it remains “committed” to exiting Multi-Links’s wireless business. — Staff reporter, TechCentral
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