Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

UPDATE 2-S.Africa's Telkom eyes 3-5 yrs to shrink market value to net worth gap

Published 10/11/2020, 09:10 pm
Updated 10/11/2020, 09:12 pm
© Reuters.

© Reuters.

* Plans include separate listing of business units

* May bring in strategic or financial investors

* First priority to unlock value in towers unit

* Fibre infrastructure, data centres, property next in line (Recasts with details from CEO interview)

By Promit Mukherjee

JOHANNESBURG, Nov 10 (Reuters) - South Africa's Telkom TKGJ.J is aiming to reduce the gap its shares are trading at to the net worth of its assets in the next 3-5 years, its chief executive said on Tuesday, as the company drives to unlock value across its businesses.

Analysts have highlighted that several South African companies are trading at massive discounts to their real value, depriving shareholders a much higher return on their investments. This is mainly due to complex structures in which the companies are held by the owners.

Among them are media and internet giant Naspers Ltd NPNJn.J , Africa Rainbow Capital Investments Ltd AILJ.J , RMB Holdings Ltd RMHJ.J , Brait SE BATJ.J and Telkom SA SOC Ltd.

"Shares in Telkom are trading at a 40-50% discount to its intrinsic value," Group CEO Sipho Maseko told Reuters.

Telkom, South Africa's third biggest mobile service provider with 13.7 million subscribers, was trading at 31.79 rand per share, down 2.05%, at 0930 GMT, and internal calculations reveal its per share price should be around 60 rand, he said.

Telkom is looking at either spinning off its individual businesses and listing them separately, or bringing in strategic or financial partners such as pension funds, Maseko said.

The first on the list will be its tower and masts business, which is at an advanced stage of finalisation and investors have been sounded out on the strategy. Next will be Openserve, its wholesale open access network and fibre infrastructure, followed by data centre operations and property disposals.

"One of the key strategic thrusts is to unlock the value embedded in the company over the next 3-5 years," Maseko said.

The partly state-owned landline and mobile operator said its headline earnings per share, the main profit measure in South Africa, rose by 25.4% to 2.19 rand ($0.1421) in the six months ended Sept. 30 from 1.74 rand in the comparable period last year.

Its revenue was down marginally by 0.4% for the half year to 21.4 billion rand.

($1 = 15.4157 rand)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.