Tragic Telkom

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Tragic Telkom

Warren Buffett famously said that when the tide goes out you can see who has been swimming without a costume.
 
This is shown starkly in the performance of Telkom shares since Vodacom split off about a month ago. After the split, Telkom traded at R54 a share. It trades now at R34 a share. The entity value has fallen by R10-billion from R28-billion to R18-billion in just four weeks, representing a massive loss of value to Telkom’s shareholders.
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The reason the "value has fallen by R10-billion" is beacuse it paid out... wait for it... R10-billion to it's shareholders. :confused:
The 10 billion was paid out as a R19 special dividend per share, and the share is currently trading at R37 per share, so if you had bought at R54, you would now have R19 in cash plus a share worth R37, meaning you would have GAINED R19+R37-R54=R2 per share...

This guy should do some research before writing crap.
 
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But if the government is looking for the key culprit to understand Telkom's poor performance and how South Africa's pricey telecommunications services have hamstrung development, it should hold up a mirror.
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Really good article. I really do wonder what is going to happen to Telkom in the medium term.
 
But if the government is looking for the key culprit to understand Telkom's poor performance and how South Africa's pricey telecommunications services have hamstrung development, it should hold up a mirror.
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Not a pretty sight
Truth is stranger than fiction
 
roberth said:
The reason the "value has fallen by R10-billion" is beacuse it paid out... wait for it... R10-billion to it's shareholders. :confused:
The 10 billion was paid out as a R19 special dividend per share, and the share is currently trading at R37 per share, so if you had bought at R54, you would now have R19 in cash plus a share worth R37, meaning you would have GAINED R19+R37-R54=R2 per share...

This guy should do some research before writing crap.
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Telkom was trading at around R110 - R115 (fluctuating) before the spin-off. Shareholders got a Telkom share + Vodacom share + R19 special div. Vodacom is trading at R56, so the original Telkom shareholder would have R37+R56+19= R112. The overall value was the same. It is true that Telkom expected its share value to rise as the separate value of each company was realised.

I think the article is a bit harsh on Telkom. Telkom was created by the previous government as part of its protected employment programme. The overall culture it inherited has never really been exorcised and there still remain too many staff (a difficult one to address, especially in tough times). There are a number of fine people and managers working at Telkom who could contribute a lot to Telecoms if they had a proper chance.
 
Takkies said:
Good Article
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Actually I do NOT agree. I expected a lot more from the Mail&Guardian.

They seems to have forgotten about the R18.00 special dividend that was paid out after the unbundeling. So R54.00-R19.00=R35.00 to where it is currently at R34.00 means only R1.00 per share and not the R20.00 per share being touted to us.
 
roberth said:
The reason the "value has fallen by R10-billion" is beacuse it paid out... wait for it... R10-billion to it's shareholders. :confused:
The 10 billion was paid out as a R19 special dividend per share, and the share is currently trading at R37 per share, so if you had bought at R54, you would now have R19 in cash plus a share worth R37, meaning you would have GAINED R19+R37-R54=R2 per share...

This guy should do some research before writing crap.
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You are explaining a lot better than me. Especially after yet another dividend yesterday...
 
zamicro said:
You are explaining a lot better than me. Especially after yet another dividend yesterday...
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That is true, but the declared R3.75 dividend has not yet been paid, so this is included in the current share price. I'm not sure when the dividend will be paid, but when it is paid, the share price will most likely drop by approximately R3.75.
 
entrepr said:
I think the article is a bit harsh on Telkom. Telkom was created by the previous government as part of its protected employment programme. The overall culture it inherited has never really been exorcised and there still remain too many staff (a difficult one to address, especially in tough times). There are a number of fine people and managers working at Telkom who could contribute a lot to Telecoms if they had a proper chance.
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Oh come on! The "old gov" has bee gone for 15 years! How on earth can the last 15 years of Telkom management not be responsible for the state it's in? Whatever culture might or might not be has nothing to do with the decisions made by the CEO, ICASA and DoC.
 
Don't worry, the goverment will enlighten the doc and icasa will be urged to help the embattled company by way of new regulations
 
Rip it apart and give slices to competent ISP's who will be able to better manage the infrastructure.

This is just the tip of the iceberg, Telkom management will not stop until they completely destroy whatever remains.
 
roberth said:
That is true, but the declared R3.75 dividend has not yet been paid, so this is included in the current share price. I'm not sure when the dividend will be paid, but when it is paid, the share price will most likely drop by approximately R3.75.
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The dividend is already discounted. If shares were held at the time of announcement, dividends will be paid to the shareholder at that time.
 
ebie said:
The dividend is already discounted. If shares were held at the time of announcement, dividends will be paid to the shareholder at that time.
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Nope. Dividends are declared in advance and a divident payment date is set. Shares then trade "cum dividend" meaning that the share includes the dividend. On the declared date, the shares trade "ex dividend" meaning that if you now buy the share, you will not recieve the dividend. Then (usually) 5 business days later, the dividend is recorded and the cash will show in your trading account.

For Telkoms results:
"Ordinary dividend number 14 of 115 cents per share (2008: 660 cents) and special dividend of 260 cents per share (2008: 0 cents) in respect of the
financial year ended March 31, 2009 have been declared payable on Monday,
July 20, 2009 to shareholders recorded in the register of the company at close of business on Friday, July 17, 2009.
Holders of ordinary shares

Salient dates with regard to the 2009
ordinary and special dividend

Last date to trade cum dividend Friday, July 10

Shares trade ex dividend Monday, July 13

Record date Friday, July 17

Payment date Monday, July 20

...
On Monday, July 20, 2009, dividends due to holders of certificated securities
on the South African register will either be transferred electronically to
shareholders' bank accounts or, in the absence of suitable mandates, dividend
cheques will be posted to such shareholders."
 
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