Telkom, for many years shunned by both institutional and retail investors, appears to have shed its poor image in the investment community, with the market rushing to snap up its shares on the expectation of a significant turnaround in its fortunes.
The share price was trading up by more than 7% in lunchtime trading on the JSE on Tuesday, extending a strong rally that began on Monday.
The latest rally comes after Telkom’s executive management team briefed investors and analysts on the company’s strategies and plans at an investor day in Pretoria on Monday.
Shortly after 1pm on Tuesday, the share price touched a fresh multi-year high of R56,57, up by 8,8% on Monday’s close, before falling back slightly.
Telkom’s share price has doubled since the beginning of the year, taking its market capitalisation — the number of shares in issue multiplied by the share price — to close to R30bn. In the past 12 months, it’s added 164%; since its all-time low, in May last year, it’s climbed by an astonishing 374%, making it one of the top performers on the JSE over that period.
At Monday’s investor day, Telkom CEO Sipho Maseko outlined the challenges and opportunities facing the company. He said Telkom’s objectives included flattening the managerial and specialist layers in Telkom, bringing leadership closer to customers, lowering staff costs and improving financial performance. The company is expected to let go of more than 300 managers as part of its current cost-cutting endeavours.
At the same event, chief operating officer Brian Armstrong outlined a series of objectives, including building Telkom into the third largest mobile operator in South Africa behind Vodacom and MTN, and ahead of current third-ranked player Cell C. He said Telkom’s strategy was to put customers first, make the company the centre of the digital home, lead in business and government, and be preeminent in wholesale services. He said a goal was to connect 1,5m homes with fixed broadband and 4G/LTE by 2019.
Earlier on Tuesday, Telkom said it had received undertakings from a sufficient number of shareholders in Business Connexion (BCX) to ensure that its proposed R2,7bn acquisition of the JSE-listed IT services company will be supported when BCX shareholders meet to vote on the transaction next Monday. — (c) 2014 NewsCentral Media