Blue Label Telecoms Limited, a prominent player in the telecommunications industry, has announced robust earnings growth for the six-month period ended 30 November 2023, despite facing challenges posed by the deteriorating macroeconomic environment in South Africa.
Earnings Surge
According to the trading statement released by Blue Label Telecoms Limited, the company anticipates a remarkable increase of more than 20% in basic, headline, and core headline earnings per share for the aforementioned period compared to the same period in the previous year.
The table provided by the company illustrates the anticipated ranges for earnings per share, headline earnings per share, and core headline earnings per share for both November 2022 and November 2023, showcasing a significant improvement in financial performance.
| Nov 2022 (cents per share) | Range | Nov 2023 (cents per share) | |
|---|---|---|---|
| Earnings per share | (8.74) | 45.49 – 45.84 | |
| Headline earnings per share | 2.09 | 45.87 – 45.95 | |
| Core headline earnings per share | 3.94 | 47.07 – 47.23 |
Core Headline Earnings Surge
Core headline earnings for the period ended 30 November 2023 amounted to R420 million, marking a substantial increase from R35 million in November 2022. The core headline earnings per share also witnessed a significant surge to 47.15 cents per share compared to 3.94 cents per share in November 2022.
Challenges and Declines
Despite the overall positive growth, certain factors contributed to declines in core headline earnings. Excluding specific contributions and declines related to the recapitalization transaction of Cell C, core headline earnings declined by 22% from R455 million to R355 million. Similarly, core headline earnings per share declined by 23% from 51.72 cents per share to 39.90 cents per share.
Factors Impacting Decline
The decline in core headline earnings was primarily attributable to a decrease in earnings from the Comm Equipment Company (CEC). This decrease was mainly due to increased expenditure related to distribution agreements and higher expected credit losses. However, the impact of these declines was partially offset by increases in earnings from other entities within the group.
Macroeconomic Environment
The trading statement highlighted the challenging macroeconomic environment in South Africa, characterized by rising interest rates, power outages, and a depreciating rand. These factors contributed to the increase in expected credit losses for CEC, aligning with the approach taken by other consumer lenders amidst economic uncertainties.
Financial Review
It’s important to note that the financial information provided in the trading statement has not been reviewed or audited by the Group’s auditors, emphasizing the preliminary nature of the figures.
Despite facing economic headwinds, Blue Label Telecoms Limited has demonstrated resilience and recorded significant earnings growth for the six-month period ended 30 November 2023. The company’s ability to navigate challenges and maintain positive momentum underscores its strength in the telecommunications sector.
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