{"id":8868,"date":"2009-07-21T00:18:00","date_gmt":"2009-07-20T22:18:00","guid":{"rendered":""},"modified":"2009-07-21T00:18:00","modified_gmt":"2009-07-20T22:18:00","slug":"testing-times-ahead-for-telkom","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/business\/8868-testing-times-ahead-for-telkom.html","title":{"rendered":"Testing times ahead for Telkom"},"content":{"rendered":"

NOW that Telkom has paid off the last of the proceeds from its sale of Vodacom<\/a>, it might have a tough time keeping shareholders interested in the company, analysts say.<\/p>\n

Yesterday, Telkom paid out a combined special and ordinary dividend amounting to R1.95-billion, largely arising from the May unbundling of Vodacom.<\/p>\n

Telkom sold 15% of its 50% stake in South Africa’s leading mobile operator for R22.5- billion to UK-based Vodafone<\/a> and floated the rest on the JSE in May.<\/p>\n

The payout consisted of a R1.15\/share ordinary dividend amounting to R600-million, as well as a R2.60 dividend, adding up to R1.35-billion — a combined R1.95-billion.<\/p>\n

Over the past month, Telkom’s share price has rallied ahead of the dividend payout after a massive drop of more than R20\/share in the past three months. Towards the end of April, Telkom was trading at more than R60\/share but dropped to about R39\/share, due to the Vodacom deal, and further down to R31.50 last month.<\/p>\n

In the second half of June, the share price began its rally to about R43 before trading “ex-div” last Monday when the company took the dividend off its books.<\/p>\n

Chris Wood, a portfolio manager at Prudential Portfolio Managers, said the share price didn’t fall by the full dividend amount as it was trading at about R40\/share throughout last week.<\/p>\n

“Telkom has declared a new dividend base of R1.15, which is low,” Wood said. “Considering that it’s going through a period of heavy investment, it will be difficult for the company to offer anything much higher than that.”<\/p>\n

Wood said Telkom would only be able to pay shareholders a maximum of R1.50 next year. He said Telkom’s dividend yield was low, compared to other companies with similar growth prospects such as Tiger Brands.<\/p>\n

“Unfortunately, Telkom wants to sell itself as a growing company, but I would prefer to see it focus on cost management,” he said. “They’re not alone in the worldwide trend of fixed-line operators experiencing falling fixed-voice revenues.”<\/p>\n

He said he was sceptical about Telkom’s Nigerian mobile operation Multi-Links, a R2.3-billion acquisition made in 2007, which this year recorded a dismal fall in average revenue per user from 32 to 9 and a R1.7- billion net loss.<\/p>\n

Dobek Pater, telecommunications and market analyst at Africa Analysis, however, felt that Telkom still had some strong fundamental qualities in the form of South Africa’s biggest fixed-line network.<\/p>\n

“Telkom’s traditional fixed-line service is getting competition from mobile voice operators, but it’s moving into IT service to big corporate clients,” he said. “The directors might have been too pre-occupied with the unbundling and have not rolled out the wireless network as fast as it would have hoped.<\/p>\n

“Now that the slate is clean, one would hope that it can move quicker with its roll- out.”<\/p>\n

Telkom share price<\/strong><\/a> discussion<\/p>\n

Business Times<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Company share price suffered massive drop from R60 to R31.50 last month<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":["post-8868","post","type-post","status-publish","format-standard","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/8868"}],"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\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=8868"}],"version-history":[{"count":0,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/8868\/revisions"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=8868"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=8868"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=8868"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}