Vodacom to leave a void
The fixed-line phone operator released its last annual financial results with Vodacom’s contribution yesterday, revealing a 6.9percent increase in revenue to R35.9-billion.
Analysts said the results were in line with expectations, but the ordinary dividend of 115 cents per share and a special dividend of 260 cents per share, which the group declared, surprised on the upside.
The company’s results remained positive, largely due to Vodacom’s performance, analysts said.
Vodacom, the group’s cellphone operator until last month, carried the overall growth with a 14.6percent jump in revenue to R27.6- billion.
Telkom sold off 15percent of its 50percent stake in Vodacom to UK-based Vodafone for R22.5-billion. The remaining 35percent has been unbundled on the stock exchange.
Telkom’s core business of fixed-line telephony showed a 3.3percent increase, primarily due to higher data income, interconnection charges, and ever-increasing basic fixed-line tariffs.
Call traffic revenue on the fixed-line network continued to slide, however, with a 3.9percent drop resulting in a second consecutive group operating loss of 34percent.
Telkom announced that it would delist from the New York Stock Exchange, given the current global economic climate and the business imperative for it to reduce its cost base.
“Maintaining a listing in the US is expensive and takes considerable management time,” the group said.
Reuben September, Telkom chief executive, said in a statement : “We have managed to conclude the Vodacom transaction at an exceptional price, given the market conditions.
“We have also concluded the sale of our 75percent stake in Telkom Media to Schenzen Media, taken our shareholding in Multi-Links (Nigeria) up to 100percent and acquired M-Web Africa (including AFSAT) from Naspers.”
Dobek Pater, Africa Analysis telecommunications analyst, said Telkom’s profitability would have been even further reduced without Vodacom.
“The problem is that the fixed- line market is losing market share to increasing competition,” he said. “It’s a global phenomenon, where fixed-line operators are having to decrease tariffs, but not necessarily seeing an increase in usage.”
To replace Vodacom, speculators have said that Telkom might want to acquire Cell C, but Pater said Cell C was not a magic pill as it was still saddled with huge amounts of debt and struggling to compete against Vodacom and MTN in South Africa.
Telkom without Vodacom – will Telkom’s profits recover?
The Times
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