{"id":492493,"date":"2023-05-20T12:59:07","date_gmt":"2023-05-20T10:59:07","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=492493"},"modified":"2023-05-28T16:09:02","modified_gmt":"2023-05-28T14:09:02","slug":"telkom-disaster","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/investing\/492493-telkom-disaster.html","title":{"rendered":"Telkom disaster"},"content":{"rendered":"

Analysts warn that Telkom faces significant challenges, illustrated by its planned R13 billion impairment on Openserve, Telkom Consumer, Gyro, and BCX.<\/p>\n

On Wednesday, the Telkom share price plummeted 16% after it said it expects a 465% to 485% decline in basic earnings per share (BEPS).<\/p>\n

On a normalised basis, BEPS is expected to decline by 70% to 90%, and HEPS is expected to be down by 60% to 80%.<\/p>\n

Telkom said the business suffered because of load-shedding, low economic growth, high interest rates, and evolving technological advancements.<\/p>\n

The disastrous trading statement comes amidst Telkom\u2019s strategy to transform into a modern telecommunications company and mobile operator.<\/p>\n

Telkom has tried to sell its fibre and tower assets, but not much has come of these plans to date. In February, it announced plans to cut as many as 15% of its workers.<\/p>\n

After consulting with unions, voluntary severance packages have now been extended to all employees, Telkom said, and costs will come through in 2024.<\/p>\n

Mergence Investment Managers head of equities, Peter Takaendesa, said Telkom remains in structural decline with weaker cash generation.<\/p>\n

Takaendesa said Telkom has great infrastructure assets. However, they are worth more to those who can use them efficiently.<\/p>\n

\"\"<\/a>

Wayne McCurrie, FNB Wealth and Investments<\/p><\/div>\n

Wayne McCurrie from FNB Wealth and Investments described Telkom\u2019s latest trading update as a disaster.<\/p>\n

\u201cWhat Telkom said is that what it has got isn\u2019t working. It has to restructure the whole business to keep pace with the modern way of communication,\u201d he said.<\/p>\n

\u201cThat is why there will be a R13 billion write-down of core assets and why Telkom\u2019s profits have disappeared.\u201d<\/p>\n

McCurrie explained that telecommunications require tremendous investments favouring large players like Vodacom and MTN.<\/p>\n

\u201cThere is huge capital expenditure (Capex), fierce competition, and enormous regulatory pressure. Data prices continue to decline, putting pressure on mobile operators,\u201d he said.<\/p>\n

\u201cThe smaller platers \u2014 Telkom and Cell C \u2014 cannot compete effectively and made a good return on their money.\u201d<\/p>\n

Sasfin Securities\u2019 David Shapiro explained that the R13 billion impairment shows that Telkom\u2019s book value for its assets is much higher than what it is worth.<\/p>\n

\u201cIt tells you that Telkom\u2019s productive assets are not going to generate what they did in the past,\u201d Shapiro said.<\/p>\n

He argued that Telkom should have taken the deal from MTN. \u201cIt was silly to turn your back on what was a rescue-type deal,\u201d he said.<\/p>\n

Telkom share price over five years<\/h2>\n

\"\"<\/a><\/p>\n

\n

This article was first published by Daily Investor<\/a><\/strong> and is republished with permission.<\/em><\/p>\n

Now read:\u00a0Telkom needs a global investor, says former Samsung exec turned Telkom board member<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"

Sasfin Securities’ David Shapiro says Telkom should have taken MTN’s acquisition “rescue-type” offer.<\/p>\n","protected":false},"author":341108,"featured_media":466373,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[80335],"tags":[10458,35,74654,109,24394],"class_list":["post-492493","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-david-shapiro","tag-headline","tag-peter-takaendesa","tag-telkom","tag-wayne-mccurrie"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/492493"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341108"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=492493"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/492493\/revisions"}],"predecessor-version":[{"id":492507,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/492493\/revisions\/492507"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/466373"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=492493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=492493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=492493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}