Enthusiasm for Telkom shares dissipated by midday on the JSE today, causing the price to halve its earlier gains as investors awaited more news about the sale of 15% of Vodacom to Vodafone.
Soon after the market opened this morning, Telkom's share price had surged 4.8%, to hit its intraday high of R113.50. However, by 10.33am, it was up just 1.65%, at R110.10, a gain of 179c on the previous day's close.
The initial bounce was caused by the news that Telkom would sell 15% of cellular network operator Vodacom's shares to UK-based operator Vodafone for R22 billion. This would increase the UK company's stake in Vodacom to 65% and reduce Telkom's stake to 35%.
“Investors have been quick to try and lock in profits where they can, especially in the light of the international financial situation. But I think they want more information on what the deal actually means and what kind of dividend will be paid to Telkom shareholders,” an equity trader says.
Trading in Telkom's shares was particularly active, with more than 2.2 million changing hands, making it the fifth most active share today. The value of the shares that traded amounted to more than R253 million, placing it third on the top value list.
An analyst says the sale is the only news that has been driving the Telkom share.
“There has not been much else going for Telkom lately. I think Telkom will pay out much of that money to shareholders, otherwise they could face a lynching,” he says.
Irnest Kaplan, MD of Irnest Kaplan Equity Analysts, says it is too soon to determine why the Telkom share price has retreated off its highs.
“The fact is that Telkom is one of the top 40 JSE stocks and so is in a lot of portfolios, and in the current markets there is a lot of adjusting going on,” he says.
Kaplan feels Telkom's share price could very well benefit from the conclusion of the deal, “...as this is what the market has been expecting for a very long time and it is good for shareholders”.
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