Telkom has warned shareholders that it is expecting reduced earnings for the year ended 31 March 2009, largely as a result of losses in the Nigerian market.
In a statement released this morning, Telkom says that, while its South African operations performed well, the Nigerian operations – which were acquired in the previous financial year – proved difficult and reported losses as of a result of competitive pricing pressures and inadequately developed distribution channels.
"Much of the focus in Nigeria has been directed at the provisioning of an extensive fibre network for future benefit," the statement reads.
Other factors impacting Telkom's results include the impairment of goodwill in, among other companies, Multi-Links Nigeria and other, estimated at R501-million. The costs relating to the Vodacom BEE deal have cost Telkom another R691-million, while the costs relating to the Vodacom de-merger come to another R177-million.
In addition, foreign exchange and mark-to-market fair value losses relating to the Multi-Links put option cost about R409-million and deferred tax crdits from the Vodacom investment will come to about R421-million.
As a result, says Telkom, basic earnings per share and headline earnings per share from continuing operations for the period are expected to decrease by about 50% to 60% and about 40% to 50% respectively. Basic earnings per share and headline earnings per share (including discontinued operations) for the period are expected to decrease by about 40% to 50% and about 35% to 45% respectively.
Discontinued operations include Vodacom, Telkom Media and Swiftnet.