{"id":12159,"date":"2012-05-11T13:05:13","date_gmt":"2012-05-11T11:05:13","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=12159"},"modified":"2012-05-11T16:55:08","modified_gmt":"2012-05-11T14:55:08","slug":"8ta-was-a-mistake-analyst","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/12159\/8ta-was-a-mistake-analyst\/","title":{"rendered":"8ta was a mistake: analyst"},"content":{"rendered":"

Metropolitan Asset Managers analyst, Johan de Kock<\/a> says that Telkom\u2019s<\/a> entrance into the mobile market was a mistake, and that the company will do well to stop investing in its mobile business.<\/p>\n

According to De Kock, Vodacom<\/a> and MTN<\/a> are very entrenched in the South African cellular market, and it is therefore very difficult for any new entrant to make money.<\/p>\n

\u201cIf you look at Cell C<\/a> \u2013 they were also late and they are still not really making money. The first mover advantage is so big [in the mobile market] that new entrants will always struggle to make money,\u201d said de Kock. \u201cTelkom was hopelessly too late.\u201d<\/p>\n

Still hope: de Kock<\/strong><\/p>\n

De Kock said that there is still hope for the fixed-line operator, saying that companies like Telkom can sometimes \u201cwork themselves out of a mess\u201d.<\/p>\n

According to De Kock, Telkom should focus on specific areas where it is strong, like its fixed-line data business, and stop investing in the mobile arena.<\/p>\n

De Kock said that the only real advantage of having a mobile operator is that Telkom may be able to convert some of their fixed-line users into their own mobile users (and hence not lose them to Vodacom and MTN). However, this strategy, De Kock argued, may be too \u2018emotionally difficult\u2019 for Telkom\u2019s management to do.<\/p>\n

Telkom a poor investment: Giyose<\/strong><\/p>\n

Hlelo Giyose<\/a>, chief investment officer and principal at First Avenue Investment Management<\/a>, is less upbeat about Telkom\u2019s financial future.<\/p>\n

Giyose argues that Telkom will never earn a return above the cost of capital on their book value, which is around R56 a share.<\/p>\n

Despite the fact that Telkom\u2019s share price is trading at around 50% of its book value, Giyose said it remains a bad investment. \u201cThe probability of you earning a 50% return on Telkom\u2019s book value of R56 is zero,\u201d said Giyose.<\/p>\n

\u201cTelkom is facing structural threats posed by the mobile guys and it is faced with intense competition from Neotel<\/a>,\u201d said Giyose.<\/p>\n

Giyose added that Telkom will find it very hard to show a return on investment on the money which KT<\/a> will put into the company.<\/p>\n

Related articles<\/strong><\/p>\n

SA mobile subscriber numbers compared<\/strong><\/a><\/p>\n

Telkom agrees KT Corp deal at cut price<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Metropolitan Asset Managers analyst says that Telkom\u2019s entrance in the mobile market was “hopelessly too late” to make money<\/p>\n","protected":false},"author":2,"featured_media":4589,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[407,26,2159,2739,261,65],"class_list":["post-12159","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-8ta","tag-headline","tag-hlelo-giyose","tag-johan-de-kock","tag-neotel","tag-telkom"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/12159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=12159"}],"version-history":[{"count":9,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/12159\/revisions"}],"predecessor-version":[{"id":12231,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/12159\/revisions\/12231"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/4589"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=12159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=12159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=12159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}