Telkom SA advanced for the first time in two weeks after Africa’s biggest fixed-line operator reduced losses at its fast-growing mobile phone unit 8ta and appointed a new chairman.
Shares in the Pretoria-based company gained as much as 3.1 percent and traded 2 percent higher at 15.95 rand by 4:49 p.m. in Johannesburg, on track for the first daily increase since Nov. 2. More than 1.3 million shares changed hands, 93 percent of the daily average over the past three months.
Revenue at 8ta, the mobile phone unit started in 2010, jumped 198 percent to 898 million rand ($101 million) in the six months through September, while earnings before interest, taxes, depreciation and amortization at the unit fell 45 percent, the company said in a statement today. Telkom wants to expand into higher-margin mobile and broadband markets to offset declines at its traditional fixed-line business.
“8ta isn’t burning quite as much cash as it did and that’s about the only positive you can take from these results,” Chris Gilmour, an analyst at Johannesburg-based Absa Investments, said by phone. “The announcement on Friday of Jabu Mabuza as chairman is also a very positive thing; I think this signals a sea change in the top management of Telkom.”
Mabuza, who is also deputy chairman of Tsogo Sun Holdings Ltd. (TSH), was one of two new directors appointed to Telkom’s board to replace departing members including previous chairman Lazarus Zim. Chief Executive Officer Nombulelo Moholi has also said she will step down.
Telkom, 39.8 percent owned by the South African government, reported a 65 percent decline in first-half earnings per share to 30.2 cents as costs rose. It also made provisions for a 449 million rand antitrust fine for abusing its dominant position in the telecommunications industry between 1999 and 2004.
The company’s 30-day historical volatility, a measure of stock swings, increased to 29.63 from 29.48 on Nov. 16. The FTSE/JSE Africa All Share Index’s 30-day volatility measure was at 8.86 versus 8.96 previously. A higher reading means an asset’s price can have bigger moves.
To contact the reporter on this story: Stephen Gunnion in Johannesburg at email@example.com
To contact the editor responsible for this story: Vernon Wessels at firstname.lastname@example.org