Telkom value shrinks R60bn in 4 years

Telkom has lost almost R60 billion in market capitalisation over the past four years, during which time it has sold its stake in Vodacom and has launched its own mobile arm, 8ta, which forecast to turn a profit only in 2016.

In its annual report for the year ended March 2008, Telkom reported revenue of R56.29 billion and operating profit of R14.48 billion, of which its mobile operation through Vodacom contributed 40.1% and 38.2% respectively.

The group’s share price for the financial year 2008 closed at R131.20 on the JSE, reaching a high of R195.02 and giving the group a market cap of R68.327 billion, down from R88.454 billion in 2007.

Towards the end of 2008, Telkom agreed to sell 15% of its stake in Vodacom to Vodafone Group. The R22.5 billion deal saw the UK group’s stake in Vodacom increase to 65%.

Telkom distributed its remaining 35% stake in Vodacom to its own shareholders by way of an unbundling process.

For the year ended March 2009, and following the sale of Vodacom, Telkom reported revenue of R36.43 billion and an operating profit of R6.39 billion.

Fast forward to results for the year ended March 2012, and Telkom reported operating revenue of R33.1 billion, and a post-tax profit of R179 million, off 93% from 2011.

On Wednesday (14 November), the group warned of further pain when it announced that it expects headline earnings per share from continuing operations for the six months ended September 2012, to be between 78% and 83% lower than the comparative period.

Telkom has had a year to forget in 2012, following a blocked deal with Korea firm, KT Corp, by cabinet in May; the resignation of its chairman and chief executive; and increasing government influence in the group which has led to speculation of the group being nationalised.

These, along with a string of woeful financial performances largely on the back of declining fixed line revenues, have led to Telkom’s share price losing almost half of its value in 2012, alone.

The group achieved a high of R29.75 in early February, but has since slipped to a current price of approximately R16.50 on the JSE on Tuesday (13 November), giving the group a market cap of R8.56 billion.

Vodacom Group, meanwhile, has gone from strength to strength, with its subscriber base surpassing 50 million in its most recent interim results report earlier this week – while its half year profit of R8.97 billion would be enough to buy its former owner, with change to spare.

Vodacom’s shares traded at an all time high on Tuesday (13 November) with the group’s market cap at R176.58 billion.

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Telkom value shrinks R60bn in 4 years