As TELKOM’S chief executive, Sipho Maseko, and chairman, Jabu Mabuza, displayed their biggest vote of confidence in the company a few days ago, cautious investors were watching for the successful execution of strategy, equity analysts said.
Maseko has held his position for just over three months. But, rather than wait for a share grant, he bought 52 520 shares for R999 980.80 at the market rate in his personal capacity two weeks ago and was followed by Mabuza, who acquired 26 000 shares for R497 580.57 on July 15.
“I can’t expect shareholders to commit to the firm when I am not personally involved. As I look around the firm, its capacity and capability, it is an investment story,” Maseko said.
For Mabuza, it is common practice to own shares in entities in which he is involved.
“It can only be because I am confident in the Telkom story. I believe in its management,” he said of the purchase on the open market, outside the closed period. Telkom shares have gained 8.63 percent in the year to date, according to Bloomberg data on Friday.
Telkom “is probably one of the best performing stocks”, Farai Mapfinya, portfolio manager at Mvunonala Asset Managers, said, but added: “If the execution doesn’t go well things can come down again.”
Investor confidence has grown following two settlements to resolve substantial anticompetition complaints against it and moves to restructure the ailing fixed line and cellular network business.
Telkom shed 1.82 percent to R18.37 on Friday, extending declines from a peak of R19.40 on July 15, an 11-month high.
The share price was discounting the reversal of the previous value destruction, said Jean Pierre Verster, an analyst at 36One Asset Management, who regarded the shares as “cheap” and the company as “a turnaround story”.
Maseko’s first test could be his resolution of a looming wage strike. The firm’s bloated cost base is of great concern and if this is brought under control the results could stabilise and increase operating earnings in the coming year, according to Verster. – Asha Speckman