The JSE could see a technology and telecommunications listing boom with pan-African cellular operator Celtel and small IT companies mulling raising capital on the bourse.
JSE listings director John Burke says the exchange has been in discussion with the advisors of a number of local technology companies that are considering listing as they seek to raise capital to help expand their businesses.
"We have been in discussions with several South African technology companies in the past few months. However, I can`t reveal their names now. Celtel have already gone on record saying they are considering a secondary listing with us towards the end of the year, maybe August," he says.
Celtel, which runs cellular networks in 13 African countries, including Uganda (where it is competition to SA`s MTN), Kenya and Zambia, recently raised $250 million in two tranches to help it fund further network expansion and finance previous debt. The group is planning a London listing and says it is considering a secondary listing on the JSE.
One local analyst says: "It would be great if they listed as it would give South African investors another telecommunications opportunity and one that has far greater exposure to African markets outside of this country. Right now choice is limited to Telkom and MTN."
The prospect of more smaller technology firms listing either on the JSE`s main board or on its cheaper alternative AltX has fund managers smacking their lips.
"Small-capitalisation IT companies have done extremely well over the past few years. The traditional big players such as Dimension Data and Datatec have floundered because of poor operating results and corporate governance issues," says Daniel Malan, analyst at fund manager Regarding: Capital Management.
Poor indicator
Malan says the JSE`s technology index is a poor indicator of how well the smaller companies have performed as it is weighted in favour of the large-capitalisation stocks.
"If one had to compare the performance of Dimension Data and Datatec since 2001 to how well companies such as ERP, Datacentrix and Mustek have done, the differences are readily apparent," he says.
In 2001 Dimension Data and Datatec were priced at R15 and 900c respectively and are now trading at around 380c and 930c. Mustek was at 100c in 2001 and is now at 950c. Datacentrix is at 330c today compared with its 2001 level of 80c, and ERP is at 156c after hitting 20c four years ago.
"Smaller stocks are better in the technology sector and should more list, with the right reasons, then it will improve choice for the investors," Malan says.
According to Malan, the right reasons include raising capital in order to expand business opportunities, rather than the owners looking for a way to sell out.
He says telecommunication shares have done very well. "In retrospect, Telkom was sold cheaply by government two years ago at R28 as it is now trading at R107."
Malan also says MTN`s success in Nigeria was initially underestimated and this has been reflected in the rapid rise of its share price. MTN was last at R42.20, off 80c on the day.
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