{"id":40094,"date":"2013-06-18T06:47:49","date_gmt":"2013-06-18T04:47:49","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=40094"},"modified":"2013-06-18T09:02:52","modified_gmt":"2013-06-18T07:02:52","slug":"telkom-a-re-run-of-the-same-movie-analyst","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/telecommunications\/40094\/telkom-a-re-run-of-the-same-movie-analyst\/","title":{"rendered":"Telkom a re-run of the same movie: Analyst"},"content":{"rendered":"

Analysts have questioned Telkom<\/a>\u2019s ability to deliver a return in the near- to mid-future, with one saying that\u00a0investors are increasingly frustrated of seeing a re-run of the same movie when it comes to the telco.<\/p>\n

Shares in Telkom closed 69 cents or 4.51% higher on Friday (14 June), with its shares up 25% or R3.20 over the past month. The market was closed on Monday for a public holiday.<\/p>\n

On Friday Telkom reported a 73.2% decline in headline earnings per share to 87.0 cents in results for the year ended March 2013.<\/p>\n

Group operating revenue decreased by 1.7% to R32.501 billion (2012: R33.079 billion).<\/p>\n

The decrease is mainly due to lower fixed-line voice revenue, partially offset by an increase in mobile and data revenue, Telkom said.<\/p>\n

Speaking on CNBC Africa post Telkom\u2019s results, Gryphon Asset Management portfolio manager Reuben Beelders<\/a> said: \u201cTelkom\u2019s results are very interesting; you\u2019ve had a balance sheet that\u2019s done virtually nothing over the past year.”<\/p>\n

“The only difference is that R12 billion that\u2019s been written off the plant and equipment. They have to live with virtually no profit, so all you have is a balance sheet that\u2019s shrunk by R12 billion.”<\/p>\n

Telkom\u2019s board took the decision to impair the carrying value of the assets of the group by R12 billion for the year ended 31 March 2013.<\/p>\n

After the impairment the net asset value is R34 per share, Telkom said that the impairment takes into account\u00a0the impact on the financial returns of the group in light of technology changes, competition from mobile operators and evolving regulatory landscape over more than a decade.<\/p>\n

\u201cI think the question for investors is will this business ever generate a return on equity? The equity is now a lot smaller, so the hurdle has just been lowered significantly,\u201d Beelders said.<\/p>\n

\u201cBut critically, if one looks at Telkom, you\u2019ve had so many management changes, so many issues that keep recurring, you\u2019ve got payroll expenses which are significantly up again this year, partly due to the fact that you\u2019ve had redundancies and staff lay-offs.”<\/p>\n

In March, Telkom appointed Sipho Maseko<\/a> as its new group chief executive, and Brian Armstrong as its chief operating officer. The group also appointed new board members in December.<\/p>\n

Telkom said on Friday that 1,800 out of approximately 21,000\u00a0employees have accepted it\u2019s voluntary retrenchment package initiated in March.<\/p>\n

\u201cI think investors are increasingly just tired of seeing a re-run of the same movie. My personal opinion, I would like to see some delivery before I buy into the stock.”<\/p>\n

\u201cThe only thing that\u2019s really in favour of the stock right now is that it\u2019s trading at probably a 50% discount to the NAV, which management now claim it to be R34. It\u2019s probably trading at a massive discount to that.”<\/p>\n

\u201cThe question to me is will they ever generate a return on equity,\u201d Beelders said.<\/p>\n

Gavin Cawse<\/a>, portfolio manager Nedbank Private Wealth Stock Broking said that the market would be comfortable with Telkom writing down its outdated equipment.<\/p>\n

He said that the group\u2019s new board was strong and appeared to be looking at the underlying issues with the company.<\/p>\n

\u201cThey had all sorts of excuses with past executives\u2026the market wants delivery,\u201d Cawse said. \u201cThe share price is certainly not going to move until the market sees that delivery.\u201d<\/p>\n

On Friday, Maseko pledged accountability for the group\u2019s \u00a0future performance, which appeared to be well\u00a0received by those who attended his results presentation in Sandton.<\/p>\n

More on Telkom<\/h3>\n

Telkom earnings sink\u00a0<\/strong><\/a><\/p>\n

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

Telkom impairs R12 billion in assets<\/strong><\/a><\/p>\n

Telkom appoints head of strategy<\/strong><\/a><\/p>\n

Telkom to appeal R449m fine<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Analysts question Telkom\u2019s ability to deliver a return in the near- to mid-future.<\/p>\n","protected":false},"author":9,"featured_media":26584,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[2997,3634,6075,26,6074,2414,65],"class_list":["post-40094","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-telecommunications","tag-brian-armstrong","tag-cnbc-africa","tag-gavin-cawse","tag-headline","tag-reuben-beelders","tag-sipho-maseko","tag-telkom"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/40094","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=40094"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/40094\/revisions"}],"predecessor-version":[{"id":40108,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/40094\/revisions\/40108"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/26584"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=40094"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=40094"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=40094"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}