Telkom’s shares reached their best level in a decade on Friday, thanks in part to rising interest from foreign investors. Telkom has been one of the best-performing stocks on the JSE in recent months, with its shares lifting from R49.04 at the end of June 2018 to a high of R87.60 on Friday, the best level since May 2009.

But Telkom’s rise is somewhat puzzling to many investors, according to Mergence Investment Managers portfolio manager Peter Takaendesa. “It’s now trading at an unusual premium valuation to SA market leader Vodacom,” Takaendesa said. “Investors who like the share are mostly pointing to the potential for value unlock from Telkom’s property portfolio and continuing market share gains in the smaller mobile division.” Vast property portfolio In November 2018, Telkom CEO Sipho Maseko said the company would consider spinning off its vast property portfolio as a “mega” real estate investment trust (Reit) to unlock value for shareholders. Its property assets had an ins...

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