HEADLINES:
R/€ 
R/£ R6bn to launch Telkom's cell service
November 24, 2009 Edition 2
Fixed-line phone group Telkom plans to spend R6 billion over five years to launch a cellphone business as profits from its fixed-line business tumble.
"A product range spanning both the mobile and fixed value pools will help Telkom defend itself more effectively against competitors," chief executive Reuben September said yesterday.
Telkom has seen its revenue at its core fixed-line business come under pressure after selling its stake in Vodacom, South Africa's biggest cellphone operator, and Telkom's main earnings driver.
The company, which already has nearly 9 000 mobile data services customers, did not disclose the details of the strategy due to competitive sensitivities.
Telkom, Africa's biggest fixed-line telecoms group, said headline earnings per share fell 37.9 percent to 242.2 cents in the six months to September, having forecast a 45-55 percent fall.
Telkom said its results had been hurt by higher operating costs that included above-inflation salary increases for its 20 000 staff.
Analysts said the operator's results fell short of their expectations as the country's first recession in nearly two decades and higher operating costs had taken their toll.
Additionally, Telkom's fixed-line business was facing an increased challenge from cellphone operators and competitor Neotel.
Telkom has embarked on a two-year cost cutting push to reduce annual expenses by R2bn, but maintenance of its ageing fixed-line network has seen costs creep higher. - Reuters
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