JOHANNESBURG — Fixed-line operator Telkom reported a 36% drop in first-half profit yesterday, as the former state-run utility continues to struggle with tough competition and burdensome costs from its new mobile arm.
Telkom, which is in talks to sell a 20% stake to South Korea’s KT Corporation, said headline earnings from continuing operations totalled 191,7 cents per share in the six months to end-September, compared with a restated 297c a year earlier.
Including discontinued operations, headline earnings fell by nearly 84%.
Operating revenue totalled R16,4 billion, down 3,2% from a year earlier, the company said.
It said it expects capital spending to total as much as 20% of revenue for the year.
Telkom, which is nearly 40% owned by the South Africa’s government, has been fighting to rein in costs and return to growth, hit by the decline in traditional telephony and a costly failed expansion plan in Nigeria.
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It is focusing on its new mobile unit, as a part of plan to become a fully “converged” telecom operator, offering mobile, fixed-line, broadband and wireless Internet.
It finalised the sale of its Nigerian unit in October, for a net loss of R1 billion. That loss is due to be booked in the second half of the financial year.
Telkom also said in October it was in talks to sell a 20% stake to South Korea’s second-largest mobile operator, KT Corporation for around $600m.
Shares of Telkom are down nearly 22% so far this year, compared with a 1% decline in Johannesburg’s All Share index.