Shares in South African telecommunications companies MTN Group, Telkom and investments holdings company VenFin rallied to all-time highs on Wednesday.
VenFin owns a 15% stake in mobile network Vodacom, while Telkom controls 50% in the mobile group that competes with MTN in South Africa. Global mobile communications leader Vodafone Group, based in Britain, holds the remaining 35% in Vodacom.
An equities dealer said these stocks were under pressure lately due to cellular operators’ announcements of reduced tariffs, but these cost-cutting initiatives have proved benign. Any loss in margin has been made up for by growth in revenue.
Shares in cellular communications operator MTN rose to a fresh all-time high of R54,20 per share after surging 170 cents or 6% on Tuesday to finish the session at R53 per share for the first time to date.
At 4.42pm, MTN was up 0,47% or 25 cents at R53,25 per share — 95 cents lower than its intra-day and all-time high it touched in early trade.
More than five million shares, valued at R272-million, had changed hands in 1 420 deals.
Telkom, meanwhile, had advanced 1,63% or 210 cents, changing hands at R131 per share, down from its all-time high of R134 per share it hit earlier during the session.
Almost 1,44-million Telkom shares, worth more than R187-million, had traded in 600 deals.
The South African fixed-line monopoly and MTN are among the six groups vying for the 51% shareholding in the yet-to-be-privatised Nigerian landline operator Nitel bundled with mobile operator M-Tel.
Following Vodacom’s withdrawal from a joint bid for Nitel, Telkom is now in discussions with other preferred bidders, including Kuwaiti-held Celtel International and Egyptian group Orascom Telecom — which has cellular interests in four African countries, including Zimbabwe.
VenFin steams ahead
VenFin, meanwhile, steamed ahead 3,6% to a fresh high of R38,75 per share, tracking the telecommunications stocks trend firmer.
In addition to its holding in Vodacom, VenFin owns various information and communications technology assets, including free-to-air e.tv, JSE-listed FrontRange and Idion, as well as dual-listed Dimension Data.
At 4.42pm, VenFin had given up its intra-day gains and was off its all-time high to change hands at R36,25 per share — 3,07% or 115 cents per share lower.
VenFin is currently trading under a cautionary and some market players have speculated that it is linked to a potential disposal of its holding in Vodacom — the company’s biggest investment — while other analysts expect the Cape Town-based group to sell its stake in listed financial-services company Alexander Forbes.
At the presentation of its annual results in September, VenFin said its investments are constantly evaluated. Among other reason, it ascribed the rise in its headline earnings to a 37,9% increase in the equity accounted earnings from Vodacom (from R480-million to R662-million in 2005).
Telkom and unlisted Vodacom will release their interim results on November 14, while MTN is expected to publish its interims on November 23.
A telecommunications analyst said there is a renewed interest in telecommunication stocks but warned that MTN’s interim results may be disappointing, given that the operator has not issued a trading update. This is in contrast to Telkom, which last month announced a 35% to 55% rise in headline earnings per share for the six months ended September 2005.
The analyst said the performance of the stocks is likely to get further direction from the earnings results later this month. — I-Net Bridge