The rocket that is Telkom’s share price shows no sign of running out of fuel. On Tuesday, the counter hit the R50 level for the first time in more than five years on investor optimism of a sustained turnaround.
The bullishness about the company’s outlook has pushed it market capitalisation above R25bn for the first time since it disposed of its 50% stake in mobile operator Vodacom.
Telkom hit the R50 mark briefly after lunch on Tuesday, up by nearly 3% on the session, before falling back slightly.
Since its low point last May, the share has added a remarkable 319%. In the past 12 months, it has gained 178%, making it one of the best performing shares on the JSE.
The rally in the shares comes on the back of a cost-cutting drive by management and new strategy aimed at growing revenues in both the business and retail consumer segments.
On Monday, Telkom rubbished claims by a trade union that a jobs bloodbath was looming at the telecommunications operator.
The South African Communications Union claimed that the company intended slashing its workforce in half — firing 9 500 of its 19 000 employees — within the next six months, with most cuts to come from its field services division.
“Telkom dismisses the speculation that it intends to retrench 9 500 employees,” the company said in written reply to a query from TechCentral. “The company is not targeting specific numbers of individuals. The aim is reduce the number of management layers and achieve an employee cost to revenue ratio of 25% over the next five years.”
Another trade union, Solidarity, claimed on Tuesday that Telkom intends using race as a factor in deciding who will be retrenched. It vowed to fight these “race-based retrenchments”, saying “race may not be used as a criterion during a retrenchment process”. The union said it would take the matter to the constitutional court if necessary. — (c) 2014 NewsCentral Media