Telkom’s loss climbs more than 50-fold after impairment cost

Government blocked the sale of a 20% stake of the communications company to South Korea's KT Corporation, but Telkom's shares and revenues have fallen since.

Government blocked the sale of a 20% stake of the communications company to South Korea's KT Corporation, but Telkom's shares and revenues have fallen since.

Telkom SA Limited, Africa’s largest fixed-line operator, said full-year losses widened more than fifty-fold after it wrote down the value of its assets by R12-billion ($1.22-billion) to reflect a lower share price.

Net loss attributable to shareholders was R11.6-billion in the year through March, compared with R216-million a year earlier, the Pretoria-based company said in a statement today. Earnings per share after one-time items fell 73% to 87 cents.

“The 2013 financial results reaffirm the need to act with urgency to turn our group’s performance around,” the company said. “Tough decisions will have to be made, particularly regarding costs and the decommissioning of unprofitable services.”

Revenue fell 1.8% to R33.1-billion as sales from the fixed-line voice service, its biggest share of revenue, decreased 4.7% to R16.3-billion.

Telkom shares rose as much as 3.2% and were trading 2.8% higher at R15.74 by 9:28 a.m.
in Johannesburg on Friday. The company, almost 40% owned by the South African government, is facing strike action amid talks with labor unions about wage increases.

Employee expenses for the year increased by 14% because of salary increases and severance package payments, the company said.

Telkom appointed former Vodacom Group, chief operating officer Sipho Maseko as chief executive officer on March 28 as it seeks to boost growth and meet a target to help deliver broadband to all South African citizens by 2020.

The government blocked the sale of a 20% stake to South Korea’s KT Corporation last year, saying it was a strategic asset.

Telkom shares have fallen 8.9% this year, compared with a 1.4% rise on the FTSE/JSE Africa All Share Index. – Bloomberg

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