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Investors hang up on Telkom

Jun 01 2012 19:04 Reuters

Company Data

TELKOM SA SOC LIMITED [JSE:TKG]

Last traded 58.28
Change 0.29
% Change 0.00
Cumulative volume 1124487
Market cap 30.35bn

Last Updated: 31/10/2014 at 04:25. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - Stocks fell slightly on Friday as investors sold off shares in fixed-line operator Telkom [JSE:TKG] after the government said it would not back its partnership with South Korean KT Corp.

Stocks were also swept up in an investor stampede to cash and secure government bonds after US jobs data pointed to slower growth in the world's largest economy.

The benchmark JSE Top 40 - (Tradeable) [JSE:J200] index fell 0.14% to 29 161.0 and the broader All-share index was 0.11% lower to 33 107.46.

Shares in Telkom dropped 8.34% to R21 - hitting an eight-year low in the session.

The move was prompted by its largest shareholder, the South African government, rejecting a deal seen as a lifeline for Telkom's ailing fortunes hit by the decline in traditional telephone usage and failed expansion in Nigeria.

South Korea's No. 2 mobile operator last month cut its offer for a 20% stake in Telkom by nearly a third, bringing the total sale value down to about R3.3bn

"With the reduced price, the government feels that selling Telkom at this price would be a give away," said Dobek Pater, a telecoms analyst at consultancy Africa Analysis.

Pater said the government may be betting on Telkom's performance to improve, which would then boost the sale price.

The Telkom woes helped spur a broader market sell off made worse by more signs of stuttering global growth.

"Weakness in Europe and Asia has weakened demand for commodities," said Megaeconomics economist Colen Garrow.

Garrow said in a research note troubles in these markets that are the main trading partner for South Africa will impact major local economic indicators in the coming months.

Consecutive monthly, annualised growth rates have been negative since last July and the latest figures are not expected to be any different, he said.

A total of 259 million shares changed hands, according to preliminary data from the exchange, just above a 200-day moving average of about 250 million shares.


telkom  |  jse  |  markets
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