{"id":31369,"date":"2013-02-08T01:59:53","date_gmt":"2013-02-07T23:59:53","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=31369"},"modified":"2013-02-08T09:23:00","modified_gmt":"2013-02-08T07:23:00","slug":"cabinet-is-really-the-board-of-telkom-analyst","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/trending\/31369\/cabinet-is-really-the-board-of-telkom-analyst\/","title":{"rendered":"Cabinet is really the board of Telkom: analyst"},"content":{"rendered":"

Paul Theron<\/a>, equities asset manager and CEO of Vestact says that South Africa\u2019s Cabinet is really the board of directors of Telkom<\/a> – while those people who were recently appointed to the board have no real influence on the company.<\/p>\n

Government is the JSE-listed company\u2019s largest shareholder with 39.8%, while the Public Investment Corporation<\/a> owns 10.9% stake in Telkom.<\/p>\n

The embattled telco is still awaiting feedback from cabinet on its future direction, after government initially tasked Communications Minister\u00a0Dina Pule<\/a> with devising a strategy for the group, having blocking a potential deal with Korean firm KT Corp<\/a> early in 2012.<\/p>\n

Pule said in January that Cabinet would announce its decision at an \u201cappropriate time\u201d.<\/p>\n

Telkom\u2019s share price contracted 42% last year alone, priced at R29.15 on January 3, 2012. By close of play on Thursday, Telkom\u2019s shares priced at R16.68 on the local bourse.<\/p>\n

Wrong decision<\/strong><\/p>\n

\u201cKorea could have done great things with Telkom, in my opinion, because that\u2019s what kind of country they come from, lots of fixed line ADSL type experience. But government decided they didn\u2019t really want that, so now what?\u201d asked Theron.<\/p>\n

\u201cThe fixed line business gets fewer and fewer customers every year, ADSL has been a good seller, but then on the other hand the 4G thing means that everybody will go wireless, they are battling with regard to 8ta<\/a>. They haven\u2019t got the customers,\u201d he said, speaking as a guest on CNBC Africa\u2019s show Hot Stoxx earlier in the week.<\/p>\n

Fellow guest and investment analyst at Investment Solutions<\/a>, Chris Hart\u00a0said: \u201cUnfortunately there has been quite a lot of value destruction with Telkom. Because of the way technology works\u2026they (Telkom) sits with quite a lot of legacy stuff which had value, but degrades quite quickly. And that\u2019s the problem – how much value is actually in Telkom?\u201d<\/p>\n

Government interference<\/strong><\/p>\n

Hart said he didn\u2019t have a problem with government\u2019s ownership in Telkom, but rather \u201cthe fact that they are actually exercising it, and actually dominating, and making business decisions that don\u2019t make sense\u201d.<\/p>\n

Theron noted that with the PIC stake in Telkom, it actually amounted to a 50% ownership in the telco.<\/p>\n

\u201cEffectively that means that the cabinet, the South African government cabinet is really the board of directors of Telkom. The people who got appointed to the board recently, and bless them I know some of them are great people, they have no real influence. It\u2019s just a job.\u201d<\/p>\n

Telkom\u2019s future<\/strong><\/p>\n

Looking ahead, Theron said he was not sure how Telkom\u2019s future would play out. \u201cGovernment has this idea in terms of the national planning commission, in that they must have cheap broadband for everyone, so it\u2019s going to drift.\u201d<\/p>\n

The analyst said that the replacement value of Telkom\u2019s assets amounted to approximately R30 billion (the group\u2019s market cap is at R8.69bn), however he question the difficulty posed in unlocking Telkom\u2019s value. \u201cWho is going to be allowed to buy them?\u201d<\/p>\n

Harts chimed in: \u201cThey need to free it (Telkom) so that the market becomes less of an oligopoly. If that does happen then maybe MTN<\/a> and Vodacom<\/a> are not such a big buy if suddenly you really start to get strong competition. But that is not going to happen (with Telkom).\u201d<\/p>\n

\u201cYou\u2019ve got a better chance of it snowing in Johannesburg,\u201d Theron said. \u201cWhat I foresee for them is just a perpetual frittering away of value over the forthcoming year.”<\/p>\n

More on Telkom<\/h3>\n

8ta LTE coverage continues to grow<\/a><\/strong><\/p>\n

Worst performing tech shares of 2012<\/a><\/strong><\/p>\n

Telkom value shrinks R60bn in 4 years<\/a><\/strong><\/p>\n

The toppling of Telkom\u2019s dominance<\/a><\/strong><\/p>\n

Telkom will be hitched to an ox wagon: analyst<\/a><\/strong><\/p>\n

Telkom strategy cannot be determined by govt \u2013 report<\/a><\/strong><\/p>\n

S&P downgrades Telkom<\/strong><\/a>
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\n<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa\u2019s Cabinet is really the board of directors of Telkom, while those people who were recently appointed to the board, have no real influence on the company. This is according to analyst Paul Theron.<\/p>\n","protected":false},"author":9,"featured_media":18433,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21,1],"tags":[1859,26,5140,28,2996,65,5142,27],"class_list":["post-31369","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-telecommunications","category-trending","tag-chris-hart","tag-headline","tag-investment-solutions","tag-mtn","tag-public-investment-corporation","tag-telkom","tag-vestact","tag-vodacom"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/31369","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\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=31369"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/31369\/revisions"}],"predecessor-version":[{"id":31378,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/31369\/revisions\/31378"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/18433"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=31369"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=31369"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=31369"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}