Johannesburg - Telkom, the best performing stock in South Africa this year, fell five percent for the second day running on Tuesday as doubts crept in about a turnaround plan that has seen the stock double in value this year.
Telkom has been a must-have in fund managers' portfolios this year, after investors were impressed by a cost-cutting plan by new chief executive Sipho Maseko, which includes slashing jobs.
But traders appear more apprehensive about the fate of the new strategy after Telkom suspended the restructuring initiative to consult with unions, said Bruno van Eck, a portfolio manager at Thebe Securities.
By 15:05 SA time, the stock was down 5.7 percent at 54.96 rand, on course for its biggest daily percentage fall since March.
Telkom, which has not paid dividends in three years, is also in talks with MTN Group about sharing networks, a deal that should also save Telkom cash.
Doubts about the fate of Telkom and MTN network sharing deal - which if it secures regulatory approval should also reduce costs - were also weighing on the share price.
“The deal is important for Telkom in its drive to reduce the costs of running the mobile arm but if there are doubts, I'd expect the share price to take some kind of a knock,” Sibonginkosi Nyanga, an analyst at Imara SP Reid.
Unlisted wireless operator Cell C has said it is planning to oppose the network sharing deal before South African competition authorities. - Reuters