Telkom plans restructuring to unlock shareholder value

Telkom CEO Sipho Maseko

Telkom is aiming to reduce the gap its shares are trading at to the net worth of its assets in the next three to five years, its CEO said on Tuesday, as the company drives to unlock value across its businesses.

Analysts have highlighted that several South African companies are trading at massive discounts to their real value, depriving shareholders a much higher return on their investments. This is mainly due to complex structures in which the companies are held by the owners.

Among them are media and Internet giant Naspers, Africa Rainbow Capital Investments, RMB Holdings, Brait and Telkom.

“Shares in Telkom are trading at a 40-50% discount to its intrinsic value,” CEO Sipho Maseko said in an interview.

Telkom, South Africa’s third biggest mobile service provider with 13.7 million subscribers, was trading at R30.05/share, down 7%, at 4.42pm, and internal calculations reveal its per share price should be around R60, he said.

Telkom is looking at either spinning off its individual businesses and listing them separately, or bringing in strategic or financial partners such as pension funds, Maseko said.

Towers and masts

The first on the list will be its tower and masts business, which is at an advanced stage of finalisation and investors have been sounded out on the strategy. Next will be Openserve, its wholesale open-access network and fibre infrastructure, followed by data centre operations and property disposals.

“One of the key strategic thrusts is to unlock the value embedded in the company over the next three to five years,” Maseko said.  — Reported by Promit Mukherjee, (c) 2020 Reuters