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Telecommunications listed on JSE Trader Telkom said Tuesday that it expects overall earnings per share (Heps) to rise by as much as a quarter in the six months to Sept. 30, 2020, which will send its shares higher.
The earnings update, which comes a week before Telkom reports its interim results, saw the company’s shares rise nearly 10% in Johannesburg to R28.60 apiece just before 10 a.m.
Interim Heps, Telkom said, will rise 15-25% compared to the same period last year, while basic earnings per share are expected to rise 19-27%.
The improved earnings performance has been primarily due to a 16% growth in operating profit supported by “strong growth” in earnings before interest, taxes, depreciation and amortization or Ebitda. The earnings growth would have been even better had it not been for an increase in Telkom’s effective tax rate, from 28.8% to 34.8%.
“The group’s performance was strong despite a difficult business environment due to the adverse impact of Covid-19 on the economy,” Telkom said. “The income of the group showed resistance to the pandemic, remaining practically stable compared to the previous period.”
The mobile grows
The mobile business continued its growth trajectory, placing Telkom Mobile “solidly as the third largest mobile operator in South Africa”, ahead of Cell C, he said.
“Management tirelessly focused on its sustainable cost management program to protect the group’s margin and Ebitda. The group’s Ebitda increased more than 5% from the R5.6 billion reported in the prior period and the Ebitda margin expanded compared to the prior period. Management optimized both direct costs and operating expenses with a significant improvement in the total cost-income ratio compared to the previous period ”
The group’s Ebitda performance was also supported by the reversal of R66 million related to a Covid-19 impairment in the provision for accounts receivable that was recognized at the end of the year March 31, 2020. – © 2020 NewsCentral Media
