Salaries, 8ta costs knock Telkom earnings

The launch of mobile operator 8ta and a wage agreement with trade unions will hit Telkom’s earnings in the six months to September 30 2010, the Johannesburg Stock Exchange-listed telecommunications group has warned.

Normalised headline earnings per share, where once-off items are excluded, will fall by as much as 20%.

Profits will take a knock due to a 7,5% increase in salaries, R144-million incurred in retrenching staff, and R205-million in operating expenditure related to the launch of the mobile business.

The strong rand, secondary tax on companies, lower investment income and a further impairment in the net asset value of Multi-Links, Telkom’s deeply troubled Nigerian business, will also negatively affect earnings.

Normalised headline earnings per share from continuing operations will fall by between 0% and 20% from a year ago.

Share earnings expected to grow 260%
However, the group says it expects headline earnings per share to be as much as 260% higher than the same period last year.

It attributes the increase to the once-off ‘fair-value loss” it had to account for last year when it divested from Vodacom.

The forecast impacted heavily on Telkom’s share price on Wednesday morning, with the counter down almost 2.2% to R35,90 by midday.

Telkom is due to report its interim results on 22 November.—TechCentral

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