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Telkom profits tumble

And its shares are down 47%

Telkom SA, South Africa’s struggling fixed-line operator, reported an 80% drop in first-half profit on Monday, hit by a $55 million regulatory penalty and weaker revenue.

Telkom, which has been hurt by declining demand for fixed-line services and regular departures of top management, said diluted headline earnings per share totalled 37,2 cents in the six months to end-September, from 177,8 cents a year earlier.

Headline EPS, the main measure of profit in South Africa, excludes certain one-time items.

The company previously said it expected a sharp fall in earnings.

Telkom said it was squeezed by lower revenue and from money set aside to pay a $55 million fine from South Africa’s competition regulator.

The regulator ruled in August that Telkom had used its dominant market position to “bully” competitors.

Revenue totalled 16,5 billion rand ($1,9 billion), down from 16,7 billion a year earlier.

Telkom’s chief executive said this month she would step down next year, becoming the fifth chief executive to leave the company in about seven years.

South Africa’s government owns about 40% in Telkom directly and a further 10,5% through its state pension fund.

Shares of Telkom are down 47% this year, compared with a 15% rise in the All-Share index.

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