VODACOM sale will hit TELKOM

TELKOM will be under severe pressure over the next few years as it adjusts to life without cash cow Vodacom.

The fixed-line phone operator released its last annual financial results with Vodacom's contribution yesterday, revealing a 6,9percent increase in revenue to R35,9billion.

Analysts said the results were in line with expectations, but the ordinary dividend of 115 cents per share and a special dividend of 260 cents per share which the group declared surprised on the upside.

The company's results remained positive largely due to Vodacom's performance, analysts said.

Vodacom, the group's mobile operator until May this year, continued to carry the overall growth with a 14,6percent jump in revenue to R27,6billion.

Telkom sold off 15percent of its 50percent stake in Vodacom to UK-based Vodafone for R22,5billion. The remaining 35percent has been unbundled on the JSE.

Telkom's core business of fixed-line telephony showed a 3,3percent increase primarily due to higher data income, interconnection charges, and ever-increasing basic fixed line tariffs.

Call traffic revenue, however, on the fixed line network continued to slide with a 3,9percent drop resulting in a second consecutive group operating loss of 34percent.

Telkom chief executive Reuben September said yesterday: "We have managed to conclude the Vodacom transaction at an exceptional price, given the market conditions.

"We have also concluded the sale of our 75percent stake in Telkom Media to Schenzen Media, taken our shareholding in Multi-Links [Nigeria] up to 100percent and acquired M-Web Africa [including Afsat] from Naspers."

Africa Analysis telecommunications analyst Dobek Pater said that Telkom's profitability would have been even further reduced without Vodacom.