Following CEO Sipho Maseko's purchase of 52 520 Telkom shares, worth R1 million, on Friday, the company's chairman, Jabu Mabuza, has invested almost R500 000 in the stock.
Mabuza, who was appointed towards the end of last year, bought 26 000 shares at an average price per share of R19.14. Telkom's share, which had dropped to below its listing value earlier this year before recovering, is trading at R19.10.
Maseko's purchase of 52 520 was at an average price of R19.04. The stock was bought on the open market.
Shares in Telkom hit an all-time low of R11.93 on 6 May, a level that took the stock down to below its initial listing price of a decade ago. Since then, however, the stock recovered to R16.35 on 10 June and closed slightly lower yesterday, losing 11c.
The improvement in the stock price follows an announcement, subsequently implemented, that Telkom was looking at writing down the value of its legacy assets, accelerating the depreciation of the assets.
Telkom impaired its network by R12 billion, which dragged it to a loss of R11.7 billion in the year to March. However, the impairment is a non-cash item, and does not affect its operations, but was rather a bid to clean the slate and bring its stock price in line with its net asset value, which is now R34.
The share also gained on the back of its results, at which Maseko said decisive action would be taken to fix the company.
In the full year, Telkom reported total turnover of R33.1 billion, lower than last year's R33.7 billion, as voice revenue dropped. Operating expenses, which include the R12 billion write-down, leapt from R31.3 billion to R44 billion, dragging Telkom to a comprehensive loss of R11.7 billion, as it has to take the non-cash charge through the income statement.
Stripping out the impairment, operating expenses increased at a lower level than inflation, at 2.2%, to R32 billion. Stripping out the write-down, Telkom reported a post-tax profit of R501 million, an improvement on its continuing operations profit of R179 million last year.
Maseko has indicated a new strategy for Telkom should start being unveiled by the end of the year.
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