South Africa's Telkom flags 70% fall in annual earningsSouth Africa's Telkom flags 70% fall in annual earnings
FILE PHOTO: A shopper walks past a Telkom shop at a mall in Johannesburg

JOHANNESBURG (Reuters) – South African telecoms firm Telkom said on Monday its earnings in the year to March may have fallen by as much as 70% due to one-off costs relating to job cuts and the impact of the coronavirus pandemic.

Telkom said it expects headline earnings per share (HEPS), the main profit measure in South Africa, to have tumbled by between 65% and 70% for the full year ended March 31 from 619.2 cents in the previous year.

Partly state-owned Telkom will announce its results on June 22.

The company told unions in January it could cut up to 3,000 jobs as part of a restructuring plan as it grappled with declining performance in its fixed voice and fixed data services.

Voluntary severance and early retirement packages have cost it 1.2 billion rand ($69.7 million).

The steep earnings drop is also a result of an additional 626 million rand impairment linked to the impact of the coronavirus outbreak, it said.

Excluding the one-off costs, HEPS is expected to fall by 30% to 35%, mainly as a result of lower core earnings.

These have been knocked by the impact of a drop in fixed voice revenues on group earnings before interest, tax, depreciation and amortization (EBITDA), an increase in finance charges and changes in the fair value of some assets.

Telkom said the 22% decline in fixed voice revenue had been offset by more than 50% growth in mobile service revenue.

The contribution of fixed voice income to the group’s overall revenue has slid to 22% in the 2019 financial year from 56% in 2013 due to shifts to new sources of revenue such as fibre and long-term evolution (LTE) technology.

Telkom shares, which have fallen more than 32% year to date against a 5.7% drop in the top 40 companies index, closed up 1.48%.

($1 = 17.2138 rand)

(Reporting by Nqobile Dludla; Editing by Promit Mukherjee and Jan Harvey)