Telkom’s share price shot up about 6% on Thursday as the fixed line operator indicated a large rise in interim earnings.
The group said it expected adjusted headline earnings per share (HEPS) to be sharply higher at the halfway stage of its financial year.
Adjusted HEPS for the six months ended September are expected to be 50%-60% higher at 292.5c-312.0c. On a reported basis, HEPS are expected to be between 5% lower and 5% higher at 185.2c-204.8c.
The group expects to report improved financial results from total operations for the first half before a R451m after-tax charge. The charge relates to the termination of its obligation of the defined benefit within the Telkom Retirement Fund, and the consequential derecognition of the corresponding funding plan asset recognised under IFRS accounting standards, it said in a statement.
This, along with restructuring costs, is excluded from adjusted HEPS.
“Group revenue growth from continuing operations is expected to be within guidance compared to the six months ended September, with continued strong demand for our compelling data propositions reflecting double-digit growth in mobile data and fibre-related data services, offset by the ongoing fixed voice and legacy data erosion,” it said.
The Telkom Retirement Fund is a hybrid fund established in July 1995 as a defined contribution plan in respect of in-service members, and a defined benefit plan in respect of pensioners. In the current period, the Financial Sector Conduct Authority approved a rule amendment for the conversion of the Telkom Retirement Fund from a defined benefit fund to a defined contribution fund. This approved rule amendment removed the funding obligation risks towards the pensioners, Telkom said.
The stock rose as much as 8% on the day, before paring gains to close 5.86% higher at R28.20. Over the past 12 months, Telkom shares have rallied more than 20%, faring much better than sector peers MTN and Vodacom, which are down about 10% and 1%, respectively.
Earlier in the week, Vodacom reported lower HEPS at the halfway stage, largely due to currency depreciation in Ethiopia and one-off costs in its international business. HEPS for the six months to end-September fell 19.4% to 353c. The currency depreciation in Ethiopia accounted for 53c a share, Vodacom said.
Similarly, MTN said it experienced challenging macro and regulatory conditions in the first nine months of the year, though it noted the trends eased in the third quarter.
Group earnings before interest, tax, depreciation and amortisation were down 35% to R45.69bn in the third quarter, but up 3.4% in constant currency, the group said.
Telkom will release its first half results on November 18.
Update: November 14 2024
This story has been updated with additional information.
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