News of Vodacom`s abandonment of its Nigerian foray negatively affected its major shareholders Telkom and Venfin on the JSE on Monday, while shares of local rival MTN gained.
Telecommunications was one of the best performing JSE indices on Monday with a gain of 2.48% to 681 points, propelled by MTN`s surge of 3.74% to R30.50. However, Telkom, which owns 51% of Vodacom, lost 0.9% to R78.20 and is now R10 off its all time high reached about a month ago.
Initial reports, confirmed late on Monday afternoon, stated that Vodacom, SA`s largest cellular service provider, had decided to pull out of its Econet Wireless Nigeria (since renamed Vee Networks) partnership after having failed to make the investment work. The decision also resulted in the chopping of some key Vodacom staff, including CEO Andrew Mthembu.
Venfin, part of the Rembrandt Group, and which owns about 15% of Vodacom, dropped 0.4% to close at R20.40.
In late Tuesday morning trade MTN had gained another 2.3% to R31.20, Telkom had recovered 0.06% to R78.25, but Venfin continued to slip with a loss of 1.47% to R20.10.
The JSE`s Telecommunications Index had risen 1.88% to 694 points, while the all share index was down 0.86% at 10 324.
"The Vodacom story has been an inhibitor to the Telkom share price," says Barnard Jacobs Mellet director David Shapiro. "Vodacom released what has amounted to a rather sinister statement and people are saying that this suspicious story has been going on for some time."
Shapiro says the fact that Telkom, through its Vodacom subsidiary, has failed to take advantage of what is considered to be Africa`s biggest growth market is not good for its outlook.
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