Africa's biggest telecoms firm Telkom unveiled a 10.6 percent rise in first-half profit, at the top end of forecasts, and said a pact blocking mobile unit Vodacom from expanding in Africa had been lifted.
But Telkom's stock fell more than 3 percent on Monday as Chief Executive Papi Molotsane failed to reassure investors that the company's use of new technologies would offset its sagging fixed-line traffic and spur murky growth prospects.
"We are being innovative ... but our revenues are under pressure. Things are tough," Molotsane told a presentation. South Africa-based Telkom said headline earnings per share - which strips out certain capital, non-trading and one-off items - rose 10.6 percent to 874.7 cents in the six months to end-September, buoyed by sturdy growth at mobile unit Vodacom.
Seven analysts polled by Reuters had forecast headline EPS of 836 cents, with forecasts ranging from 790 to 909 cents. But revenues at its core fixed-line business edged up just 0.7 percent, and the company said turnover would start sagging in the second half and get worse once newcomer Neotel starts offering retail fixed-line services next year.
But investors applauded news that Britain's Vodafone Group Plc had agreed to allow Vodacom, which is owned jointly by Vodafone and Telkoms, to expand anywhere in Africa except Kenya and Egypt. The move relaxes a shareholder pact that has hamstrung Vodacom's growth, while rival MTN leads a scramble for the continent's high-growth assets.
Vodacom CEO Alan Knott-Craig told Reuters in an interview the company had stepped up efforts to expand in Africa and was looking at buying a pan-African operator - a move that could ignite a fresh wave of acquisitions on the continent. Telkom also said it was hoping to muscle into new markets and that it was looking at possibilities in Democratic Republic of Congo, Nigeria, Kenya and Angola.