Telkom warns of fall in full-year headline earnings

numbers “seem to indicate a decline of 40%-50% for the year, so we will have to see when Telkom updates its trading statement what will happen to headline earnings per share”.

Telkom appointed former Vodacom MD Sipho Maseko as its new CEO late last month, while also appointing Telkom Business MD Brian Armstrong as chief operating officer.

Also last month, the company announced a fresh round of retrenchments and early retirements in a bid to cut costs.

BMI-TechKnowledge MD Denis Smit said Telkom was facing “fierce competition” and falling prices, and needed to “aggressively tackle its cost base”. Mr Smit said Telkom now had a “strong board” but the remaining uncertainty was now the “government’s role for Telkom going forward”.

Last week, the Department of Communications released its draft national broadband policy for comment, saying Telkom would provide “the bulk of the core backbone structure”, with support from state-owned companies and the private sector.

Mr Smit said that while the telecommunications industry was very competitive, “our cost bases are still very high in this country — we’re still way above international benchmarks, so competition is good”.

He added that Telkom’s rivals should not underestimate it, as it was “competing vigorously and doing the right things”.

“They are totally capable of coming back on track. Obviously the caveat to that is the strategic decisions the government needs to make in terms of the broadband strategy going forward. That’s the missing piece of the puzzle right now,” he said.

Bataung Capital Advisors MD Tota Tsotsotso said the market expected a decline in headline earnings per share of almost 40%. The company’s share price has declined 39% over the past 12 months. With Thabiso Mochiko