Telkom stock fell after the company said it was slashing its
proposed investment in a pay-TV division and rejecting an investment
proposition by Saudi operator Oger Telecoms, writes Lesley Stones in Business Day.

Instead of pumping R7,5bn into the highly speculative field of pay-TV, Telkom will invest heavily in boosting its voice and data networks, and may also buy into a foreign cellular operator.

The market has waited months for clarity on Telkom’s future direction as it reviews how best it can combine both fixed and mobile voice and data services to shore up its traditional income. But yesterday’s announcement lacked the excitement that analysts had expected, and its share price fell 10,14% to close at R131,20.

Plans that have been assessed and dismissed during the review included selling a stake to the Saudis, selling its entire fixed line infrastructure to MTN and selling its 50% stake in Vodacom.

“The share price is down because people were expecting bigger news, like they were selling Vodacom or had decided to list it,” said one analyst. Instead, the most dramatic move is to “substantially reduce” its investment in Telkom Media, which won a licence to enter the pay-TV market last year.

Three other firms also won licences, raising concerns that the audience was too small for them all in an arena already dominated by MultiChoice.

Telkom owns 66% of Telkom Media and earmarked R7,5bn for the venture, but it is now trying to sell most of its stake.

Click here to read the whole report, posted on Business Day's website.