The share price took a drubbing of 6.39percent on the JSE on Friday to close at R50.50.
Telkom chief executive, Sipho Maseko, on Friday said that Telkom’s management was not in control and could not dictate to shareholders, including the government, what to do with their shares, but that the government had promised to be disciplined in their approach.
“Whether the government decides to dispose of its stake partially or fully, we ask that they are thoughtful about how they do it in a way that is disciplined and organised whatever is done must be able to advance the strategic agenda of the company,” Maseko said.
Last month Finance Minister Malusi Gigaba said that the government would sell its stake in the company to meet budget requirements, as expenditure was estimated to overshoot its targets by R3.9billion.
The minister, however, did not disclose how much of the government’s stake in Telkom would be sold, stating only that a “portion” would be sold. The government currently has a 39.76 percent stake in Telkom, whose market capitalisation on Friday was just under R27bn.
However, Gigaba had in his Medium-Term Budget Policy Statement speech expressed qualms about being forced to sell a portion of its stake in the firm to assist the nation's fiscus.
“We do not take this decision lightly, but we have had to in order to maintain the credibility of the expenditure ceiling,” Gigaba had said.
Telkom’s total revenue for the six months under review declined by 0.6percent to R20bn, while the company’s headline earnings per share decreased 7.4percent to 303.9cents in that period.
Telkom’s mobile service revenue recorded a 43.2 percent growth supported by a 35.9percent increase in the active subscriber base to 4.4million. Postpaid subscribers increased 36.3percent to 1.3million, with prepaid subscribers grew 35.7percent to 3million. The group’s total data revenue increased 9.7percent to R6.5bn.
The company said overall its performance was negatively impacted by the challenging economic environment, with its BCX having experienced the lion's share of the pains in the period due to being exposed to corporate businesses and the public sector, which are both under pressure.
The group said that it had embarked on a business reorganisation initiative of its BCX business while investing in its future growth.
Maseko said management would seek to keep operating revenue flat and continue to exercise discipline on costs to respond to the revenue headwinds.
“Our applications development, maintenance, software engineering and system integration skills will be brought together to improve our performance across the group, while investing in talent pools for SAP, Oracle, Microsoft and other key software technologies.
“Simultaneously we have identified the need to create space and capability to invest in new technologies and capabilities such as data science and cybersecurity solutions and consultancy skills, enabling us to work with customers to solve their business problems and use our technologies to deliver outcomes,” Maseko said.
Telkom Business Connexion was relaunched as BCX earlier this year; this after the IT services company Business Connexion was bought out by Telkom in 2015.
Maseko said BCX had initiated a portfolio review process of identifying the core and non-core assets.
He added that this process had resulted in the classification of certain BCX assets as held for sale and that BCX would continue the review process throughout the remainder of the financial year.
- BUSINESS REPORT