* Telkom says landline revenues under pressure
* Shares dip 1 pct, up 50 pct year-to-date
* Positive steps made in cutting operating costs
By Helen Nyambura-Mwaura
JOHANNESBURG, June 13 (Reuters) - South Africa’s Telkom SA reported an expected 35 percent jump in full-year headline earnings on Friday but warned revenues from its landline business would be under pressure.
Telkom said headline earnings excluding one off items rose to 388 cents per share for the year ended March 31.
Telkom said it was still facing shrinking revenues and climbing costs due to operating in a highly competitive environment. Revenue crept just 1 percent higher to 32.5 billion rand ($3 billion).
“These results confirm that we still face quite a lot of headwinds ahead of us, largely driven by the pressure on our fixed-line revenues,” Chief Executive Sipho Maseko told reporters.
Fixed-line revenue decreased by more than 7 percent to 9.4 billion rand, but income from its mobile business jumped more than 70 percent.
Total revenue was boosted by a number of one-off items such lower depreciation charges - the previous year’s earnings were weighed down by a 12 billion rand writedown - and by a tax benefit of 246 million rand.
It also had a gain of more than 2.1 billion rand related to a retirement medical aid liability.
“There is a heck of a lot of adjustments that have been made in these numbers, so its pretty difficult to see where the actual growth is,” said Reuben Beelders, portfolio manager at Gryphon Asset Management in Cape Town.
However, there were now signs of some operational improvement, he said. Many customers and analysts see the company as bloated and inefficient.
Operating expenses fell more than 2 percent to 18.2 billion rand, partly from cutting back employee head count by 9.5 percent.
Telkom intends to shrink management layers to save 1 billion rand in expenses each year over the next five years by reducing the ratio of staff costs to revenue to 28 percent, from 30 percent currently.
Telkom shares were down more than 1 percent shortly after the stock market opened in Johannesburg, but have gained 50 percent so far this year.
$1 = 10.6930 South African Rand Editing by Joe Brock