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Telkom CEO Serame Taukobong. Picture: BUSINESS DAY/FREDDY MAVUNDA
Telkom CEO Serame Taukobong. Picture: BUSINESS DAY/FREDDY MAVUNDA

Telkom is having its moment in the sun with its share price faring better than that of its rivals on the JSE. The company is benefiting from operations with no exposure to currencies that have devalued and growth in its mobile business, all while taking advantage of SA’s largest fibre network. 

Over the past year, the tables have seemingly turned for Telkom, which has been battered by public markets. At R32.07, its share price is just a third of the R97 it reached in June 2019, a sign of just how far the stock had fallen out of favour. 

Yet, the share is 28.42% firmer than it was a year ago

So far in 2024, Telkom has had a better time on the market than its sector peers. Year to date, the fixed line operator is up 6.47%, compared with Vodacom and MTN, down 2.54% and 28.42%, respectively. 

Telkom boss Serame Taukobong told Business Day that the way to change market perceptions was by executing on its strategy, communicated 18 months ago, premised on data usage growth and taking advantage of its fibre assets to meet demand and increase earnings. 

“The share price highs that Telkom reached were in a certain era in a certain journey. And the execution of that journey, or us not executing on the journey, is what led to the market rerating us.”

He said the first part was concluding the sale of masts and towers unit Swiftnet for R6.75bn. 

“We are almost there. We’re waiting for approval from Icasa. That will be the first milestone. And we believe that we’ll execute on that this financial year. That’s key.”

The second was “continued delivery, and key milestones like today, of showing that this [infrastructure company], premised on steady and continuous data growth, is happening”, he said. 

Earlier last week, Telkom reported an almost 10% jump in profit at the halfway stage as its cost optimisation initiatives started to yield results.

Profit for the six months ended September was up 9.7% to R1.07bn, but on an adjusted basis profit was 67.9% higher at R1.64bn.

Group revenue for continuing operations was up 1.9% to R21.4bn, with mobile service revenue increasing 10% and fibre data service revenue rising 15.5%.

Third, “we said to the market we will exit noncore properties. We’ve delivered against that,” said Taukobong.

“The key thing for us is our say/do ratio, that we deliver what we promise, and consistency. The market punished us brutally when we came [out] with horrible precash flow numbers. We said we will be consistently delivering on free cash flow and we’ve shown two steady quarters of reporting on that. We have to constantly deliver and show sustainable free cash flow. We’re doing that.”

The group is also under pressure to strengthen its balance sheet and reduce debt.

According to Taukobong, the group was at “its worst” with a 1.9 times debt to ebitda ratio. This has come down to 1.3 times. 

“I think the constant delivery of washing our face is what the market is expecting from us. It’s not a magic wand to make the share price go up. But it’s for us to constantly deliver and the share price will come,” he said. 

“The team and I don’t wake up chasing the share price. We’ve got to deliver on our promises and show the market that Telkom is a journey.

“We got to R100 [a share], not overnight. That journey took seven or eight years. This journey might take the same period. So for us, it’s about consistency of communication, consistency in execution. And that’s our promise.”

gavazam@businesslive.co.za

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