For a second successive day, shares in Telkom advanced more than 5% on the JSE, after the group pointed to an urgent need to address its cost base, including its human capital requirements.
In afternoon trade on Monday (13 January), Telkom advanced as much as 5.43%, or R1.75 to R33.95 on the local bourse, having added 5.89% on Friday.
Shares in Telkom have swelled more than 100% over the past year, having broken through the R30 level for the first time in more than two years, last week.
Telkom hit an all time worst trade of R11.34 in May 2013.
The All Share Index traded 0.5% higher on Monday, to 45,756 points.
Bloomberg reported last week that Telkom CEO Sipho Maseko is planning to sack as many as 1,000 managers as part of a strategy to turn the struggling telco around – a process which he described to Bloomberg as being a “complex transformation”.
According to the report, in addition to its 21,000 employees, Telkom also uses approximately 3,000 contracted employees.
In a statement on Friday (10 January), Telkom stressed, however, that to date a decision regarding staff reduction has not been reached and therefore no action has been implemented.
In November, Maseko 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.
However, analysts remain skeptical over Telkom’s progress. “At this point in time, I would prefer to wait and see how the Telkom turnaround progresses before forming a strong opinion.”
“There is certainly opportunity to de-risk the mobile business and drive efficiencies – we would like to better understand the next generation network strategy and associated capex in order to better understand the company’s future prospects,” one analyst told BusinessTech.
One other analyst said that Telkom’s recent jump may be as a result of the R30 resistance level turning into a support; however, he noted that, technically, the share is overbought.