By Tosin Sulaiman
JOHANNESBURG, June 14 (Reuters) - Shares of South Africa'sTelkom SA rose on Friday as investors bet thefixed-line operator may be on the path toward recovery after a73 percent drop in full-year profit.
Telkom has written down the value of its network by 12billion rand ($1.21 billion) and agreed to settle somelongstanding regulatory disputes, as new chief executive SiphoMaseko looks to convince the market it has turned the corner.
Telkom, in which South Africa's government and pension fundhold a combined majority stake, has lost three quarters of itsmarket value in nearly six years, hit by competition from mobileoperators MTN and former unit Vodacom.
"We've had a bit of a tough time over the last few years andwe want to just reset exactly who we are," said Maseko, Telkom'ssixth chief executive since 2005.
Shares of Telkom were up 5 percent at 16.10 rand at 1434GMT.
"The real concern is the majority shareholder in governmentwhich has really put a spanner in the works in terms of enablingthe company to turn around," said Nic Norman-Smith, chiefinvestment officer at Lentus Asset Management in Johannesburg.
Pretoria last year blocked a $385 million offer from SouthKorea's KT Corp for 20 percent of the company. Theruling African National Congress sees Telkom as a critical assetin its plan to roll out internet service to the poor.
Telkom said headline earnings per share totalled 87 cents inthe year to end-March, down 73 percent from a year earlier, hitby lower revenue and costs of an employee severance programme.
Headline earnings, the main measure of profit do not includecertain one-time items. Including the cost of the networkwrite-down would put Telkom at a loss of 11.7 billion rand forthe year.