TELECOMMUNICATIONS PERFORMANCE
Blue Label and Telkom beat mobile operators’ share gains
While the performances of Vodacom and MTN have been disappointing, with warnings this may continue well into the first quarter
The share prices of Blue Label Telecoms and Telkom have outperformed those of the mobile network operators in 2016. With earnings from both Blue Label and Telkom expected to remain relatively strong in 2017, analysts still expect good share price growth from the two, although at lower levels. Blue Label is in the process of buying a 45% stake in SA’s third-biggest mobile network operator, Cell C. This will result in Blue Label, which distributes prepaid vouchers and starter packs on behalf of mobile network operators, competing with its clients. The company’s share price has gained 55% since January. Mergence Investment Managers portfolio manager Peter Takaendesa said Cell C’s prospects were still clouded by its relatively weaker balance sheet, even after the Blue Label transaction, and "technically they can’t get any preferential treatment from Blue Label as that will anger other suppliers, MTN and Vodacom". Telkom’s stock has increased 11.15% so far in 2016 on the back of strong g...
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