UPDATE 2-Telkom to delist from NYSE as FY profit falls 46 pct

* To delist from New York Stock Exchange

* Operating rev up 6.9 pct; operating expenses up 19.5 pct * Shares close day 0.71 pct up

* One-off items impact fixed-line expenditure

(Adds CEO, analyst comments; background; shares)

By Gugulakhe Lourie

JOHANNESBURG, June 22 (Reuters) - South African fixed-line phone firm Telkom SA Ltd (TKGJ.J) said on Monday it would delist from the New York Stock Exchange to cut costs after posting a 45.9 percent fall in full-year headline earnings per share.

Telkom, the dominant fixed-line operator in Africa, surprised the market by declaring a dividend. It is offering 115 cents per share and a special dividend of 260 cents, compared to a dividend of 660 cents and no special dividend.

Telkom shares closed the day 0.71 percent higher at 35.25 rand, while a weaker JSE Top-40 index of blue chips .JTOPI ended 2.15 percent down.

Telkom said it would delist from the New York bourse to cut costs and would keep a Level 1 American Depositary Receipt programme to facilitate over-the-counter trading in the United States.

"The results that came out were in line with expectations. Dividend surprised on the upside," Tubby Goodwin, a trader at Investec Securities in Johannesburg said.

Telkom, which has operations in Nigeria, Kenya, Namibia among other African countries, has seen revenue at its core fixed-line business come under pressure, after spinning off its main earnings driver, Vodacom, (VODJ.J) in May, and selling the South African mobile phone company to British Vodafone. (VOD.L)

"Telkom needs to reposition itself as a matter of urgency," Spiwe Chireka, a telecoms analyst at Frost & Sullivan said.

"The sale of Vodacom has cast doubt on the future performance of the company. Given that fixed line services are losing ground to new technologies, it is important that it takes a page out of the books of mobile operators like Vodacom and MTN (MTNJ.J)."

Telkom said that as part of its strategy to provide mobile data as well as fixed and nomadic voice capability, it had rolled out 141 W-CDMA sites in major metropolitan areas in South Africa.

MOBILE TRIALS

Telkom Chief Executive Reuben September said whether the firm would offer full mobile-phone services in South Africa would depend on the outcome of pilot and customer trials the company was carrying out. He said the results of the market research were due later this year.

"We are, however, aware of the power of the entrenched mobile companies. With this in mind, Telkom will not commit to further capital expenditure other than that focused on reducing costs before the company has completed its market research," he said.

Telkom said its operating revenue for the year to the end of March rose 6.9 percent to 35.9 billion rand, while operating expenses increased by 19.5 percent to 29.8 billion rand.

The firm said it was targeting an operating cost reduction of 10 percent over the following three financial years.

The company's headline earnings per share for continuing operations dropped to 557 cents per share for the year to the end of March compared with 1634.8 cents per share the previous year, as costs related to expenses, impairments of assets and Vodacom (VODJ.J) transaction knocked profits.

The company said one-off items, including 177 million rand expenses related to the Vodacom deal and impairments of investments, impacted fixed-line expenditure.

Telkom wrote down its investment in Nigerian private operator Multi-Links and Africa Online.

Multi-Links was touted as a big money-spinner thanks to Nigeria's vast untapped telecoms market. However it reported a net loss of 1.76 billion rand on Monday. (Reporting by Gugulakhe Lourie; editing by Karen Foster)