Telkom has released a trading statement to alert shareholders that it expects a significant increase in earnings for the year ended 31 March 2021.
Shareholders are advised that reported headline earnings per share (HEPS) is expected to increase by 145% to 155%, while reported basic earnings per share (BEPS) is expected to increase by 300% to 310% compared to the prior year.
This is mainly due to the significant growth in reported Group EBITDA of approximately 20% compared to the prior year and a reduction in the reported effective tax rate from 37,6% to 30,5% in the current year.
The strong performance includes the impact of voluntary severance packages , voluntary early retirement and section 189 retrenchment packages (VSP/VERP and retrenchments) of R270-million and the related tax impact of R76-million in the current year while prior year earnings includes R1 186-million and the related tax impact of R332-million relating to VSP/VERP and retrenchments.
The impairment of receivables and contract assets remains high, in line with the prior year, which included a provision of R626-million reflecting the uncertain environment relating to Covid-19.
The Group achieved strong underlying performance with solid growth in underlying operating profit driven by strong growth in underlying Group EBITDA compared to the prior year.
The growth in underlying Group EBITDA was underpinned by a robust performance in the Mobile business and effective and sustainable cost management. The mobile business continued its growth trajectory in service revenue while the overall sustainable cost management program outperformed management’s expectations.