Telkom's shares have gained a whopping 149.71% over the past year, by far beating the JSE's all share index, which only grew 8.27% over the same period.
Telkom, in which government has a stake of almost 40%, closed yesterday at R68.67, a 1.04% decline on its previous close, although it still beat the drop on the all share, which was 1.3% lower.
The improvement in the company's listed fortunes come despite its continued battle with declining voice revenue, which gains in its data unit failed to offset. The company is also seeking new avenues of revenue, and is punting high-speed broadband products such as long-term evolution-advanced (LTE-A) and fibre to both homes and businesses.
Telkom's share price was hard hit after government binned a proposed offer from Korea-based KT Corporation that would have led to a R3.3 billion injection, previous CEO Nombulelo "Pinky" Moholi's resignation, and a R449 million Competition Tribunal fine.
Continued challenges
Telkom, which listed in March 2003, saw its share hit a 10-year high on 12 September 2007, when it closed at R92.69, before it started a downwards trajectory. About five years ago, the stock was trading at around the mid-R50 level.
It started to recover after hitting an all-time low last May, of R11.93, after it impaired its legacy assets ? a move welcomed by the market despite the drag in its bottom line ? and improved operating profit.
Although the company has cut back on costs, it recorded all but flat revenue in the first half of the year, as its top line only gained 1.6% to R13.3 billion. Its bottom line came in at R1.2 billion, down from last year's R3 billion, although the six months to September 2013 benefitted from R2.17 billion in once-off cost savings.
Telkom's profit was also affected this year by the R325 million it paid out in early severance and voluntary retirement packages to let 406 staff members go. On a normalised basis, profit gained from R791 million to R1.4 billion.
However, Telkom's operations have yet to show significant growth, as operating profit declined from R3 billion to R1.6 billion. The telco also continued to shed fixed-lines, which have dropped from 3.7 million to 3.5 million, and voice operating revenue declined 4.1% to R7.8 billion.
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