Tax, labour costs hit Telkom earnings

Telkom’s headline and basic earnings per share will decline by between 15% and 25% for the year ended 31 March 2018 as a result of an increased tax bill and higher employee costs, the partially state-owned telecommunications operator said on Friday.

The company, which operates both fixed-line and mobile networks in South Africa, said in a trading statement ahead of the publication of its annual results on 28 May that the decline in earnings is the result of a “significant increase in our effective tax rate from the 15.2% in the prior year to slightly below the South African corporate tax rate and higher labour costs driven by both inflationary and market-related adjustments”.

It said the performance is line with revised guidance it published on 10 November 2017.

The prior year’s reported earnings were impacted by voluntary severance packages and voluntarily early retirement packages of R66m, with a related tax benefit of R13m, it said.

Telkom’s shares were last trading up 1% at R54.53 in mid-afternoon trading after the update was published. The share has depreciated by 26.2% in the past 12 months and by 26.2% in the past three years. The company, in which the South African government holds a 39.3% direct stake, has a market capitalisation of R27.6bn.  — (c) 2018 NewsCentral Media