Telkom shares recover

By Paul Vecchiatto for Telkom

Cape Town, 28 Jun 2005

Telkom`s shares ticked up in mid-morning trade today after falling by at least 10% yesterday after the shares went ex-dividend on Friday.

By 10am today, the Telkom share price had edged up 60c to R106.35 as it recovered a little of the 900c it lost yesterday.

Amith Maharaj, head of the warrants trading desk at Deutsche Bank, says the fall was due to the share going ex-dividend, which meant that Friday, 24 June, was the last day an investor could purchase the share and still qualify for the dividend.

"The fall correlated with the 400c dividend and the 500c special dividend declared by Telkom," he says.

For the financial year ended March, Telkom grew headline earnings per share by 47.5% from 863.6c to 1 274.1c.

Operating revenue for the period rose to R43.12 billion from R40.48 billion previously, while operating profit soared from R9.25 billion to R11.22 billion.

A JSE telecommunications analyst says he expects Telkom`s share price to recover yesterday`s losses as it continues to benefit from its unique market position.

"Effectively Telkom remains a monopoly and has nothing to fear as any major competition, such as the second national operator, is taking a long time to come into play," he says.

The analyst says another bolster for the Telkom share is that it is tightly held as government owns 39% of the stake, followed by institutions that need it for their portfolios.

"Not even [cellular operator] MTN offers the same kind of upside in the short- to medium-term," he says.