Telkom posts drop in FY profits
South African fixed-line operator Telkom posted a drop in profits for the fiscal year to March 2007 as costs grew quicker than revenues. Net profit fell to ZAR 16.81 per share from ZAR 17.46 a year earlier. Revenues were up 8.4 percent to ZAR 51.619 billion, driven by the mobile arm Vodacom, while operating profit fell 1.4 percent to ZAR 14.470 billion. The EBITDA margin declined to 38.3 percent from 43.2 percent in 2006. Telkom expects to increase capital spending in the current fiscal year to ZAR 7 billion from ZAR 6.6 billion last year. The board has also approved a further ZAR 2.4 billion for share repurchases after spending ZAR 1.6 billion last year on buying back stock. For the past year, the company is paying a dividend of 600 cents per share plus a special dividend of 500 cents.
At the fixed-line activities, revenues rose 1.8 percent to ZAR 33.295 billion last year, helped by growth in data services. The number of access lines fell by 1.4 percent to 4.642 million, while total fixed-line traffic fell 5.4 percent to 29.344 billion minutes. The number of internet customers rose by 7 percent to 305,013, of which 255,633 used ADSL. Telkom expects fixed-line revenues to remain under pressure this year amid planned price cuts and new competition, while costs will be on the rise due to investments in new services and staff costs. The fixed-line EBITDA margin for the year is forecast at 37-40 percent.
