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JSE Trading Update: Telkom

Johannesburg, Nov 10 (I-Net Bridge) - South African telecommunications group Telkom (TKG) advised Wednesday that for the six months ended September, its normalised headline earnings per share from continuing operations, which excludes once-off items, are expected to be between 0% and 20% lower than the normalised HEPS of 280.6 cents for the six months ended September 2009.

However, headline earnings per share, which includes the STC on the special dividend, the compensation expense and the fair value loss on Vodacom shares in the prior year, are expected to be between 240% and 260% higher than the reported HEPS of a loss of 160.2 cents for the six months ended 30 September 2009.

Normalised basic EPS (BEPS) from continuing operations are expected to be between 0% and 20% lower than the normalised BEPS of 279.0 cents per share for the six months ended September 2009.

BEPS are expected to be 85% to 105% lower than the BEPS of 7,860.9 cents reported for the six months ended September 2009. BEPS from continuing operations for the prior period are distorted by the accounting for the sale and unbundling of Telkom's 50% stake in Vodacom.

The company said the main differences between basic earnings and headline earnings are the profit on the sale and gain on unbundling of its 50% share in Vodacom in the prior period and the related capital gains tax and impairments and write-offs relating to property, plant and equipment and intangible assets.

The company attributed the lower earnings to higher employee expenditure as a result of the 7.5% salary increase agreed with the unions and workforce reduction expenditure incurred of approximately 144 million rand and the inclusion of approximately 205 million rand operating expenditure relating to start up costs of the mobile business.

It is also due to higher fair value and exchange rate losses incurred due to the mark to market valuation of forward exchange contracts and interest rate swap agreements as a result of the strengthening of the rand and lower investment income as a result of lower cash balances.

Significant once off items impacting the results in the current period include the impairment of the net asset value in Multi-Links Nigeria of approximately 201 million rand and STC on the special dividend paid of approximately 60 million rand.

Telkom's results are due to be released around Monday November 22.

I-Net Bridge, Tel: +27-11-280-0644,

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