Johannesburg | Friday
SHARES in South African telecoms group M-Cell tumbled nearly 15% early on Friday, extending Thursday’s 6,6% slide on the new government telecoms policy plans.
M-Cell lost 240 cents to a 20-month low of R13,80, pulling its parent Johnnic down to R46.50. At 0736 GMT M-Cell was trading at 14.70 and Johnnic was at 47.20.
Venfin, which along with Vodafone, has a stake in the country’s number one mobile operator Vodacom, slid 4,2% to R15,90. The telecoms index was off 8,2% in a fractionally weaker overall market .
”It’s more the fixed-mobile licence issue than anything,” said one analyst.
On Thursday, the government issued its final telecoms policy plans, saying it would license two new operators to rival fixed-line monopoly Telkom. It said the new operators, and Telkom, would be issued with ”fixed-mobile” licences, which analysts interpreted as meaning they would be able to offer mobile services in competition with M-Cell’s MTN.
”People need to know exactly what fixed mobile convergence actually means and it needs to be made clear that this is only for rural areas,” said one telecoms analyst.
”The market is reading this as if there are going to be six mobile operators from next May and that is raising fears of pricing pressure on their market share,” he said. ”But I think this is very much an overreaction.”
”It’s a follow through from news that an extra licence will be allowed. There’s a lot of stock out there,” said a trader, who said there was support for the stock at R14.
The government said a fixed-mobile service was one ”by means of a communication device in a static or mobile environment, using fixed or mobile infrastructure or a combination”. – Reuters