Telkom shares surge 4%
Telkom surged through the R30 a share level on the JSE on Wednesday (8 January) as investors await news on the future of its mobile arm, Telkom Mobile.
In afternoon trade on the JSE, Telkom advanced 4.2% or R1.23, to R30.49 – the first time the telco has broken through the R30 level in more than two years.
The All Share Index meanwhile, remained flat, at 45,856 points.
In November, Sipho Maseko, Group CEO at Telkom, admitted that the Telkom Mobile business was going through “a very difficult time”, and is in discussions with parties over future operations.
Maseko stressed that Telkom would continue to be a full-service operator.
The group was subsequently linked to talks with Cell C and MTN, although neither operator confirmed any discussions had taken place.
Asked by BusinesTech whether Cell C was in talks with Telkom Mobile over a merger, Jose Dos Santos, Cell C chief commercial officer, and Acting CEO said: “Market consolidation is inevitable. Consolidation will help smaller operators build scale to compete more effectively with players that have significant market power.”
“There is likely to be some form of consolidation or partnership in the industry. However, any decisions on consolidation or future partnerships involving Cell C would be for our shareholders to decide upon.”
MTN said that, while it does engage with Telkom as part of normal business practice, it would not speculate on a possible merger deal with Telkom Mobile.
An analyst told BusinessTech that Telkom’s jump on Wednesday may be as a result of the R30 resistance level turning into a support; however, he noted that technically the share is overbought.
Other analysts said that a jump in share price, supported by good volumes often pre-empted an important announcement.
An investment in Telkom a year ago would have delivered a 77.92% return today, with the group having reached an all time worst trade of R11.34 in May 2013.
In November, Telkom reported a marginal increase (0.3%) in operating revenue for the six months ended September 2013, to R16.2 billion.
The group pointed to headline earnings per share of 224.2 cents from 101.1 cents in the prior reporting period.
Profit after tax increased 41.1% to R773 million, but EBITDA decreased 0.4% to R3.9 billion.
More on Telkom
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MTN Telkom talk rumours re-emerge
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