The fixed-line and mobile telecommunications provider wants to be "nimble" within a highly competitive market dominated by mobile operators.
Telkom has reached an agreement in principle with the Competition Commission that it would pay a fine of R200m in settlement of a case related to anti-competitive behaviour and abuse of its dominant position in the South African market.This follows the group's agreement in April to pay R449m fine imposed on it last year after it was found guilty of a similar offence.
Chief executive Sipho Maseko would not provide further information regarding the agreement reached with the Competition Commission‚ which he said had been referred to the Competition Tribunal.
The group's full-year loss widened more than fifty-fold after it wrote down the value of its assets by R12bn to reflect a lower net asset value that is in line with the lower share price.
The net loss attributable to shareholders was R11.6bn in the year to March‚ compared with R216m last year. Excluding the write-off‚ profit after tax was R501m.
Maseko said the results "reaffirm the need to act with urgency" to turn the group's performance around.
"A full strategic review of the company was focusing on short- and medium-term interventions to unlock value‚" he said.
"Tough decisions will have to be made‚ particularly regarding costs and the decommissioning of unprofitable services‚" Maseko said.
However‚ he would not comment on whether the group already had a buyer for some of its non-core assets and its non-performing iWay Africa Internet business.
"We are going back to basics and will focus on core business‚" he said.
Revenue declined by 1.7% to R32.5bn as a result of a 4.7% decline in fixed voice revenue‚ which was R16.3bn. Headline earnings per share decreased by a whopping 73.2% to 87c.
Mobile revenue increased 22.7% to R1.4bn while mobile data revenue more than doubled‚ rising 123.3% to R364m.
Telkom's operating expenses increased by 2.2% to R32bn. Employee expenses were 14.5% higher‚ primarily due to the R434m cost of voluntary severance and early retirement packages. There was also an average annual salary increase of 6.5% and a higher bonus provision. A total of 1‚589 employees took voluntary severance packages and left the company in May.
Maseko said the group would review all options to reduce staff numbers.
"We have a significant cost base. We will look at (among other things) staff costs and running costs of all properties‚" he said.
"But we will also look at growth options and ensure we don't lose staff who are needed to (execute) growth options. We have to be prudent how we manage that and be sensible," he said.
The company is negotiating with unions, which are demanding wage increases of up to 11%. Telkom has offered 6%. Unions have threatened a strike but Maseko said there would not be a strike yet as union members were still considering Telkom's wage offer.
He said he was confident that once short- to medium-term interventions had been implemented‚ the company would generate acceptable returns for shareholders.
"The staff understands where we are at and I have seen every indication that they want to get Telkom back on the path‚" he said. "We will do that in a financially sustainable way," he added.
For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.
We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.
Go to: http://www.inet.co.za
