Telkom Mobile’s data-first strategy bodes well for the company during the COVID-19 pandemic and will bolster the company’s financial performance.
This is the view of Preshendran Odayar, a senior equity research analyst at Nedbank Corporate and Investment Banking.
Speaking to Business Day TV, Odayar said South Africa’s telecommunications sector has been resilient during the COVID-19 pandemic.
Both Vodacom and MTN have shown service revenue growth in South Africa in recent months, and he expects Telkom to follow the same trend.
He said there is a perception that Telkom is losing market share to Vodacom and MTN in South Africa.
What they do not appreciate, Odayar said, is that 69% of Telkom Mobile’s revenue comes from data which is bolstered by the lockdown and people working from home.
“I think people will be pleasantly surprised when Telkom reports their results towards the end of the year,” he said.
Big bounce-back for Telkom during lockdown
Telkom’s share price was hit hard in March, declining from R31.85 on 6 March to R14.86 on 23 March.
This was part of a general selloff which saw the JSE All Share Index (JSE ALSI), which includes 150 JSE-listed companies, fell by 35% between 17 February and 19 March.
Since hitting its yearly low on March, Telkom’s share price doubled and reached R36.78 on 6 July. It is currently trading at around R28 per share.
Vodacom, in comparison, did not see the same volatility during the lockdown which shows more trust on its resilience.
The chart below shows Telkom’s share price since the beginning of the year.