{"id":34998,"date":"2013-04-08T01:00:53","date_gmt":"2013-04-07T23:00:53","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=34998"},"modified":"2013-04-08T09:34:27","modified_gmt":"2013-04-08T07:34:27","slug":"sa-telcos-still-a-winner-analyst","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/telecommunications\/34998\/sa-telcos-still-a-winner-analyst\/","title":{"rendered":"SA telcos still a winner: analyst"},"content":{"rendered":"

If you are thinking of investing, the telecoms sector in South Africa remains a good bet with potential for continued growth, according to Nick Crail<\/a>, portfolio manager at RMB Private Bank<\/a>.<\/p>\n

However, shares in MTN<\/a>, Vodacom<\/a>, and Telkom<\/a> all lost ground on the JSE on Friday, tracking the All Share Index which declined 1.47% to\u00a038,492 points.<\/p>\n

MTN has recorded a steep decline since achieving a record level of R184.45 in early February, closing Friday 2.31% lower to R157.52, valuing the company at R296.69 billion.<\/p>\n

Similarly, Vodacom has come off a high of R129.88 in early January, to close 1.89% down at R108.25 on Friday (5 April) giving the group a market cap of R161.07 billion.<\/p>\n

Telkom\u2019s woes have been well-documented, but the company appointed a new executive team at the end of last month. Sipho Maseko<\/a> was named as the new CEO, while Dr Brian Armstrong<\/a> was appointed as COO.<\/p>\n

Shares in Telkom ended relatively flat on Friday, at R14.68, giving the group a market cap of R7.65 billion.<\/p>\n

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

\u201cTelkom\u2019s announcement of new CEO is a good thing, but is it enough? The biggest problem with Telkom over the last few years has been its lack of identity and therefore its lack of coherent strategy,\u201d Crail said.<\/p>\n

\u201cSipho Maseko\u2019s appointment and that of new COO Brian Armstrong show an intent from Telkom that they require top calibre, experienced telecoms management and that is definitely a step in the right direction.”<\/p>\n

“However, from an investor\u2019s point of view, the proof is in the pudding – and until Telkom shows us a clear and definitive strategy and a track record of delivery, it\u2019s just noise,\u201d the portfolio lead said.<\/p>\n

Crail said that the fact that, in tandem with the PIC, the government has a controlling stake in Telkom could be good news in that they could push a particular strategy and demand results.<\/p>\n

\u201cConclusion: another step in the right direction, however it\u2019s just noise at present, we want more tangible strategy and delivery before investing,\u201d he said.<\/p>\n

Vodacom and MTN<\/strong><\/p>\n

As investment vehicles, Crail said that the short term outlook for MTN and Vodacom was neutral and defensive.<\/p>\n

Longer term, he said, MTN was strongly preferred due to its African consumer exposure and growth abilities.<\/p>\n

\u201cVodacom\u2019s primary exposure is to RSA, and although their contribution should rise from their (limited) African involvement, the best reasons to hold Vodacom are its slick management, high dividend yield policy and its relatively defensive earnings.<\/p>\n

\u201cGoing forward we expect no great growth to come from this counter and although aspects like decreased interconnect rates and more competition lower some aspects of their earnings profile, the role out of LTE, increased data contribution and M-Pesa<\/a> and its derivatives should negate the other losses. Hold, because you want the dividend,\u201d the analyst advised.<\/p>\n

MTN\u2019S juggling act<\/strong><\/p>\n

Crail said that MTN is juggling more balls because of its involvement in more jurisdictions, some of which (ie, Iran) aren\u2019t exactly popular at present and there are risks to their involvement.<\/p>\n

\u201cLike Vodacom, voice and interconnect is under more competition and that will have a negative effect on earnings; however, the increased contribution from data, 3G and LTE in most markets and of course the Mobile Apps potential give this company a greater growth profile.”<\/p>\n

\u201cAs with any new products brought to market, development and infrastructure spend will increase, but with such potential on the African continent, this stock is a keeper,\u201d the portfolio manager said.<\/p>\n

Telcos in SA
\n<\/strong><\/p>\n

\u201cWe like the sector, especially because in Africa, there is so much potential for the cellphone and all sorts of applications (business and other) using this technology,” Crail said.<\/p>\n

“Therefore, telcos have great potential. However, there are risks associated with this. Vodacom for its dividend and MTN for its growth,\u201d the portfolio manager said.<\/p>\n

More on telecom stocks<\/h3>\n

Telkom shares buoyed by new leadership<\/strong><\/a><\/p>\n

Sipho Maseko the new Telkom CEO\u00a0<\/strong><\/a><\/p>\n

Vodacom slides on SA opp concerns<\/strong><\/a><\/p>\n

MTN CEO warns Cell C on price war<\/strong><\/a><\/p>\n

MTN lifts revenue, ups dividend<\/strong><\/a><\/p>\n

MTN defends neutral approach to price war<\/strong><\/a><\/p>\n

Vodacom, MTN feel Cell C\u2019s punches: investor<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

If you are thinking of investing, the telecoms sector in South Africa remains a good bet with potential for continued growth according to analyst Nick Crail.<\/p>\n","protected":false},"author":9,"featured_media":31987,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34,21],"tags":[2997,26,1415,28,1483,2414,65,27],"class_list":["post-34998","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","category-telecommunications","tag-brian-armstrong","tag-headline","tag-m-pesa","tag-mtn","tag-rmb-private-bank","tag-sipho-maseko","tag-telkom","tag-vodacom"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/34998","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=34998"}],"version-history":[{"count":9,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/34998\/revisions"}],"predecessor-version":[{"id":35052,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/34998\/revisions\/35052"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/31987"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=34998"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=34998"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=34998"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}