Telkom [JSE: TKG] expects its headline earnings per share will fall by between 30% to 40% in the six months to end-September, due in part to a large interest bill.
The company spent billions on building its mobile business, which increased its debt burden. Its most recent annual results showed its net debt burden grew by more than 28% to R8.8bn in the year to end-March.
The group said that its profit for the past six months declined because of the large increase in net finance charges due to this increased borrowing.
Telkom's earnings also took a hit from forward exchange contracts, and its decision from floating rate debt to fixed rate debt.
By 15:30, its share price was down more than 9% to R61.38.
Its share price is now down 37% since mid-year.
When you spend capex with cashflow u don't have ? Share been coming down over last 4 months.— Mark Narramore (@marknarramore1) November 5, 2019
Market has about R7 for full year vs the R1.8 for H1 now - downgrades to come
TELKOM SA SOC LIMITED – TKG : Trading statement https://t.co/lLEu7GGxiz via @Moneyweb
Tuesday's profit warning comes ahead of its interim results, which will be published next week.