Public Policy Correspondent
CONTINUING lack of competition in the fixed-line telecoms market will see Telkom reporting huge increases in headline earnings when its financial results are released today.
Lengthy delays in introducing competition to Telkom have allowed the fixed-line operator to clinch long-term contracts with 90% of corporate clients, helping the listed company strengthen its financial position.
On average, government and business clients account for 70% of Telkom’s revenue.
Telkom said in its recent trading statement that it expected an increase of up to 55% in earnings a share for the year to March. Telkom stock has almost quadrupled in value since its listing in March 2003.
The company attributed its buoyant performance to “restructuring expenses and extending the useful lives of certain assets”. Analysts said staff cuts at Telkom had also contributed to cost containment at the company.
Last year Telkom said it wanted to reduce staff costs as a percentage of revenue to 17% from the current level of 22,6%. In the 2003-04 financial year, staff costs amounted to R6,7bn.
