Telkom says goodbye to Wall Street
Telkom's delisting from the New York Stock Exchange (NYSE) will save the company as much as R50 million a year.
Speaking at the company's results presentation yesterday, Telkom CFO Peter Nelson explained the costs of the listing outweigh the value received. “The listing is costing us between R30 million and R40 million, maybe even R50 million, a year.”
The decision forms part of Telkom's drive to dramatically cut costs across the company. Nelson added it has taken a holistic view of cutting costs across the entire business. “There are no sacred cows, and the listing is no exception.”
Nelson explained that, not only have the costs been high, it has also taken a large amount of management time to keep the listing going. The company noted the costs to delist are marginal and will not have a significant impact on the business.
Irnest Kaplan, of Kaplan Equity Analysts, says Telkom's decision will be a welcome relief for the company. “The most likely scenario is that the cost of the listing overshadowed the profile advantages of being on the NYSE.”
He adds that it will see more than the financial benefits, as it will now be able to devote this time to the functioning of the business. “Lost time is equally as costly as the financial impact.”
Investors at yesterday's presentation seemed unconcerned about the company's decision to leave behind its New York listing.
Telkom listed in the US in March 2003 at the same time it took to the Johannesburg Securities Exchange.