South Africa’s Telkom Reports Dip in H1 Profit

South Africa’s Telkom SA announced on Tuesday that its half-year profit slumped by 36%. The dive occurred due to a surge in finance costs and unfavourable foreign exchange shifts. Source:biznews.com The company, that is 40% owned by the South Africa, has spent billions of rand on its mobile business. That spending helped bolster performance last year but has driven up its debt burden. Net finance charges and fair value movements rose 87% in the first half. Telkom earlier forecasted in November that it anticipated its profit to drop up to 40%. In the end, its headline earnings per share for the six months to Sept. 30 stood at 183.4 cents, versus 288 cents a year earlier. Compared to a restated figure for the first half of 2018, Telkom’s HEPS dropped by 44%. In its statement, the company emphasised its “solid revenue performance” despite a weak economic environment, driven by its mobile business, which grew revenues by 56.6%. Telkom’s statement further says “Our mobile business remains the fastest growing business in the market with market share gains underpinned by our affordable broadband-led propositions, which resonate with our customers.”

Amid a drop in fixed-line customers, Telkom has been investing heavily in areas like mobile and fibre - in common with other African telcom groups as demand for internet speed and data surges with growing smartphone usage. But a 30.9% increase in cash paid for capital expenditure pulled its adjusted free cash flow into negative territory, at minus 1.3 million rand ($87,342.70).