Shares in the South African telecommunications titan Telkom plummeted on Friday morning following the telecommunications industry liberalisation announced by Minister of Communications Ivy Matsepe-Casaburri on Thursday afternoon.
Matsepe-Casaburri unveiled sweeping changes in the sector. Many industry players and observers described these changes as a serious move towards curbing the group’s monopoly and stranglehold on the South African telecommunications industry.
From February next year, cellphone operators will be able to use any fixed lines that may be required for the provision of their service, including fixed lines provided by companies other than Telkom.
Value-added network service providers will also be allowed to carry voice over the internet, which will offer consumers a much cheaper way to make international calls than via Telkom.
At 12.50pm, Telkom shares were 5,23% or R4,05 weaker at R73,70 after a whopping 2,97-million shares valued at R2,17-million had traded in 586 deals, making it the morning’s most active share.
The group’s share price gave up R2 or 2,51% to R77,50 on Thursday from R79,50 when the local bourse closed on Wednesday.
Shares in the telephone monopoly have lost 7% in value since September 1.
“The deregulation announcement came as a surprise to the market and it obviously hurts Telkom as a monopolistic telecoms provider. The announcement brings about measures that will, in a near future, reduce revenue,” HSBC media and information technology analyst Franca di Silvestro said.
She attributed the dramatic fall in the Telkom’s share price to the minister’s announcement, adding that the industry and shareholders were taken by surprise.
“Changes had to come but this is too drastic,” the analyst added. — I-Net Bridge