We are crushing Vodacom and MTN in shareholder value – Telkom

Telkom released its latest financial results this week, which revealed that operating revenue increased by 5.3% to R41.8 billion and EBITDA increased by 8.5% to R11.3 billion.

This growth is mainly thanks to the excellent performance of its mobile services revenue, which increased by 58.3%.

Telkom grew its active mobile subscribers by 85.9% to 9.7 million users, thanks to its affordable data-centric value proposition.

These results exceeded analyst expectations and the company’s share price jumped after the results were released.

Excellent share price performance

Telkom’s share price has performed very well over the past year, increasing from R52.64 on 1 June 2018 to the current level of around R90 per share.

What makes Telkom’s share price performance impressive is that other local telecoms operators – Vodacom, MTN, and Blue Label Telecoms – struggled with share price growth over this period.

So significant was the performance differential that Telkom compared its total shareholder return for the last financial year with its competitors in its results presentation.

Telkom showed that its total shareholder return of 44.3% was much better than that of MTN and Vodacom, which lost 21.3% and 21.8% of their shareholders’ money.

Telkom’s strong share price performance

Cannon Asset Managers CEO Adrian Saville, who picked Telkom as a good investment for 2019, explained that Telkom’s share price in 2018 did not reflect the value it offered.

Of specific interest, Saville said, is Telkom’s underlying property portfolio held through an entity called Gyro.

Gyro’s subsidiaries manage Telkom’s portfolio of 1,332 properties, which includes offices, client-service centres, residential dwellings, land parcels, and 6,500 masts and towers.

Effectively, Gyro is a “mega” real estate investment trust (REIT) that has a market value of R24 billion – equal to a large portion of of Telkom’s market cap.

“We expect this portfolio to be separately listed through the course of the next year or so,” said Saville.

“This spin off would represent a substantial capital recognition for shareholders, releasing R45 in property assets to add to the current market price of R64.”

Share price comparisons

The charts below compare Telkom, Vodacom, and MTN’s share price performance over the past year.

Telkom Share Price

MTN Share Price

Vodacom Share Price

Blue Label Telecoms Share Price (Cell C)

Now read: Telkom’s results explained in 5 simple slides

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We are crushing Vodacom and MTN in shareholder value – Telkom