May 11, 2005
By Dylan Griffiths and Antony Sguazzin
Shares of Telkom, Africa's biggest telephone company, gained 4.1 percent after it said annual profit rose by as much as 55 percent, beating analysts' forecasts.
Telkom said in a statement to JSE Securities Exchange News Service yesterday that earnings for the year to March were affected by "restructuring expenses and extending the useful lives of certain assets". It did not provide details.
Telkom, state-controlled until 2003, is writing down the value of assets over a longer time period, cutting its depreciation charge.
Profit also rose as Vodacom, in which it has a 50 percent stake, boosted cellphone subscribers across Africa, investors said
"We expected a really good set of results, especially from Vodacom"
"It looks well ahead of what the market was expecting," said Gavin Joubert at Coronation Fund Managers in Cape Town.
"The depreciation charge comes down and we expect a really good set of results, especially from Vodacom."
Shares in Telkom rose R4.45 to close at R112 in Johannesburg yesterday, giving the firm a market value of R62 billion. The stock has almost quadrupled since the government sold a portion of the company in March 2003.
Telkom said annual earnings a share and profit a share before one-time items and goodwill amortisation rose between 35 percent and 55 percent. That equates to profit a share before one-time items and goodwill amortisation of between R11.66 and R13.39 compared with the R11.08 median estimate of 10 analysts surveyed by Thomson Financial.
Vodacom, Africa's biggest cellphone operator, reported a 7.1 percent surge in customers to 14.4 million in the three months to December.
Telkom has been cutting jobs and disconnecting non-paying customers to boost profit as it prepares for the introduction of competition in South Africa's fixed-line market.
The JSE Securities Exchange regulations compel companies to notify shareholders as soon as they are aware that earnings will differ by 20 percent or more from the prior year's profit.
They are not compelled to release further information on the reasons for the difference until they formally announce their results.
More detail on the earnings would be released on June 6, the company said.