Telkom market cap on the slide

Under recent financial and judicial duress, Telkom (TKG) has seen a startling drop in its market capital when compared to South Africa’s top three biggest tech companies.

MyBroadband BusinessTech compiled the following table, listing the top 10 JSE-listed tech companies in South Africa in terms of market capital.

Company JSE Market Capital* (Billions) Share Price* (Rands) P/E ratio*
MTN MTN 251.43 133.40 16.63
Naspers NPN 164.26 400.11 33.79
Vodacom VOD 152.38 102.41 15.15
Telkom TKG 14.08 27.05 8.22
Reunert RLO 13.56 68.00 11.37
Datatec DTC 8.02 43.00 18.02
Altech ALT 5.61 52.90 12.08
Blue Label Telecoms BLU 4.18 6.20 13.42
EOH EOH 2.87 29.80 15.08
Altron ATN 2.45 23.20 10.96

*Accurate at close of business 16/02/2012

While Telkom’s market cap is still 4th in terms of the JSE-listed tech companies presented here – the fact that the discrepancy between 4th and 3rd position is 1000% reveals a troubling decline for the incumbent operator – whose market cap stood at R19.26 billion around the same time last year (2011).

To put the figure into perspective, the current Competition Commission case against the telecom company, in which the commission seeks to fine Telkom R3.5 billion, would eat away as much as 24% of the company’s market value.

Telkom’s Price/Earnings ratio is also significantly low, which in usual terms would place the company in the field of ‘cheap’, thus appealing. However, analysts are indicating that in real terms, the opposite is true.

In trade on Tuesday (14 February 2012) in the midst of the Competition Commission tribunal, Telkom’s shares declined, while Vodacom (VOD) saw an investor spike.

Drikus Combrinck, Portfolio Manager at PSG Konsult told BusinessTech: “It’s a case of investors pulling out of one (Telkom), and moving into another (Vodacom). Investors want to remain in telcos, and see better value in one over the other.”

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Telkom market cap on the slide