/ 11 June 2013

Telkom to write down assets by R12-billion

Telkom To Write Down Assets By R12 Billion

The continent's largest fixed-line operator said on Tuesday that it will write down the value of its assets by R12-billion to reflect the company’s lower share price and implied net asset value.

Other considerations included “the returns from some of the legacy assets of the group which are below commercial norms as a consequence of technology changes, competition from mobile operators and an evolving regulatory landscape,” the Pretoria- based company said in a statement today.

Telkom, which is almost 40% owned by the government, said in April that full-year earnings fell at least 20% as it battled tougher competition from mobile and broadband companies. Earnings per share excluding one-time items from continuing operations will be as much as R2.44 lower than a year earlier, it said on Tuesday morning.

The telecommunications company’s share price declined in April after it was fined R449-million by the country’s competition tribunal for abusing its dominant position. The stock has dropped 14% this year and on May 6 reached the lowest level since the start of trading in March 2003.

The impairment charge is a non-cash item that won’t affect the group’s cash flow, the company said.

“It is akin to an accelerated depreciation charge,” Telkom said.

Telkom is due to release its results for the fiscal year ended in March on June 14.

– Bloomberg