Jobs on line as Telkom earnings plummet

Telkom plans to reduce its cost base - which could result in jobs being lost - to improve its profitability, it said yesterday.

Telkom reported a 64.5% drop in basic earnings to 30.2c a share for the six months to September.

Profit before tax declined 48.9% to R547-million, dragged down by a penalty imposed by the Competition Tribunal, higher employee expenses due to annual salary increases and lower fixed-line revenue.

Revenue declined marginally by 1.5% to R16.1-billion. Operating expenses increased 1.6% to R15.6-billion.

Chief financial officer Jacques Schindehütte said Telkom was unlikely to continue operating as it has been doing, especially given that its total expenses were almost the same as revenue.

He said the costs base would have to be reduced and employee costs "will come into play".

"We are targeting to reduce costs in property and anything related to procurement. Labour costs and costs of providing services to rural areas will also receive attention," he said.

But its decision on cost reduction will be determined by the government's strategy related to the implementation of broadband services, in which Telkom is expected to play a key role.

The government recently unveiled broadband plans aimed at providing high-speed internet services to every citizen by 2020.

Telkom CEO Nombulelo Moholi is expecting a policy directive from the government about broadband services by March .

In the meantime the company will remain focus ed on its strategy of growing the business and will focus on, among other things, fixed-mobile convergence.

The government has been criticised for the strategic direction of Telkom.

In June it blocked the sale of a 20% stake in Telkom to South Korea's KT Corporation.

It recently used its majority stake to vote four independent non-executive directors off the Telkom board. - BDLive