Telkom’s share price declined from R74 per share in the beginning of 2017 to levels of just below R50 per share in December.
Despite the decline, Telkom remains upbeat about its prospects and is confident it still offers good value to investors.
The company said the share price decline was partly caused by the government’s potential sale of its stake in the company.
“Investors perceive the government of South Africa as a desperate seller who will sell its stake at a huge discount, which is reflected in the share price performance,” said Telkom.
Telkom said it found that investors were nervous that the government would not trade the shares in an orderly manner, and this would have a negative impact.
“To this end, the Telkom share has been trading on sentiments rather than on fundamentals.”
Telkom’s performance has also been negatively impacted by the poor economic conditions in South Africa, which contributed to a decline in the share price.
Telkom offers good value
Telkom said its business strategy is solid and valid, despite the short-term challenges impacting its performance.
“We are investing for future growth in the form of mobile and fibre,” said Telkom.
“The mobile business is showing strong growth in service revenue – higher than 40% annually – and we expect the growth trajectory to continue as our innovative and attractive data offers are resonating well with customers.”
“Our fibre investment is also gaining momentum. However, our fibre investment case is long-term in nature and therefore the returns will be fully realised in the longer term.”
Telkom said it is a leader in the local fibre market, and is showing growth in fibre to base stations, fibre to businesses, fibre to cabinets, and fibre to homes.
“Openserve is completing modernising the network to ensure that the network is ready to capture the booming data growth,” said Telkom.
Telkom added that it also rewards its shareholders with a dividend.
“Telkom’s dividend policy is 60% of headline earnings, which represents an attractive dividend yield of approximately 6%,” it said.