South Africa’s part state-owned fixed line operator Telkom has published its annual results including a 1.7 per cent drop in operating revenue and headline earnings per share (HEPS) falling by 73.2 per cent.
The poor results do not come as a surprise after the operator published a warning in April that there would be an at least 20 per cent drop in HEPS and confirmed on Tuesday it had undergone an impairment of its legacy network to the value of ZAR12 billion (US$1.2 million).
Other features of the financial results for the year ending March 31, 2013, included a net debt reduction for the Group on 46 per cent to ZAR2.1 billion (US$212 million) and an 18.6 per cent increase in generated free cash flow, taking it to ZAR2.1 billion.
In the results overview, the company wrote: “The 2013 financial results reaffirm the need to act with urgency to turn our Group’s performance around.”
The results for the year under review do not include the effects of impairment charge, since it took place after March 31.
They do however include a ZAR592 million (US$60 million) contingency fund for settling a dispute with the Competition Commission and other legal matters.
There is also the ZAR434 million (US$44 million) designated for voluntary severance packages.
Telkom Group chief executive officer (CEO) Sipho Maseko said: “Success will require a complete transformation of the Group. A full strategic review is currently underway focusing on medium and short-term interventions to unlock value
“Tough decisions will have to be made, particularly regarding costs and the decommissioning of unprofitable services.”
