Shares in Telkom have rocketed more than 21% since reaching a multi-year low in intraday trading last Thursday, signalling that investors believe the sell-off was overdone.
The share price climbed to as high as R35.78 on Monday morning in Johannesburg, and were last seen up 6.4% at R34.84. The rally comes on top of an almost 10% surge in its share price on Friday.
Last Thursday, Telkom shares plunged to just R29.42 apiece in intraday trading on the JSE, its lowest level in more than six years.
Traders believe a big seller was depressing the price.
Telkom’s share price went on a roller-coaster ride in 2019, briefly touching an all-time high above R100/share by mid-year before a punishing sell-off in the second half that saw two-thirds of its value wiped out.
The sell-off was relentless, and accelerated after the group published its interim results in November and then pursued — and failed to bag — a deal to buy rival Cell C.
Late last year, Cell C signed a comprehensive expanded roaming agreement with MTN South Africa, with the latter expected, in effect, to manage the former’s network. This is likely to reduce Cell C’s capital expenditure requirements meaningfully and, coupled with a planned upcoming recapitalisation from the Buffet Consortium and other investors, could put it on a sounder financial footing and potentially turn it into a stronger competitor — to Telkom’s possible detriment. — (c) 2020 NewsCentral Media