Telkom expects fall in profits

2009-11-13 11:44

Telkom expects to report a fall in first-half profits, the fixed

line operator said today.

Normalised headline earnings per share from continuing operations

for the period were expected to fall by approximately 45% to 55%, it said in a

trading update.

This, it added, was due to its South African business continuing to

experience margin pressure absorbing higher-than-inflation increases in

operating costs.

Payments to local and international operators were higher and

salaries had increased as a result of Telkom’s agreements with the unions.

Telkom’s Nigerian operations were struggling.

“Trading conditions in Nigeria remained tough as a result of local

economic factors, pricing pressures and the short term strategy to reduce

inventories and acquire subscribers by subsidising certain handsets.”

The weaker Nigerian economy had also placed increased pressure on

consumer spending.

Friday’s statement resulted in its share price dropping over 2% on

the Johannesburg Stock Exchange.

Telkom is expected to release interim results on November 24.

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