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UPDATE 2-S.Africa's Telkom eyes 3-5 yrs to shrink market value to net worth gap

Tue 10th November, 2020 6:19am
* Plans include separate listing of business units
    * May bring in strategic or financial investors
    * First priority to unlock value in towers unit
    * Fibre infrastructure, data centres, property next in line

 (Recasts with details from CEO interview)
    By Promit Mukherjee
    JOHANNESBURG, Nov 10 (Reuters) - South Africa's Telkom
 TKGJ.J  is aiming to reduce the gap its shares are trading at
to the net worth of its assets in the next 3-5 years, its chief
executive said on Tuesday, as the company drives to unlock value
across its businesses. 
    Analysts have highlighted that several South African
companies are trading at massive discounts to their real value,
depriving shareholders a much higher return on their
investments. This is mainly due to complex structures in which
the companies are held by the owners. 
    Among them are media and internet giant Naspers Ltd
 NPNJn.J , Africa Rainbow Capital Investments Ltd  AILJ.J , RMB
Holdings Ltd  RMHJ.J , Brait SE  BATJ.J  and Telkom SA SOC Ltd.
    "Shares in Telkom are trading at a 40-50% discount to its
intrinsic value," Group CEO Sipho Maseko told Reuters. 
    Telkom, South Africa's third biggest mobile service provider
with 13.7 million subscribers, was trading at 31.79 rand per
share, down 2.05%, at 0930 GMT, and internal calculations reveal
its per share price should be around 60 rand, he said.
    Telkom is looking at either spinning off its individual
businesses and listing them separately, or bringing in strategic
or financial partners such as pension funds, Maseko said. 
    The first on the list will be its tower and masts business,
which is at an advanced stage of finalisation and investors have
been sounded out on the strategy. Next will be Openserve, its
wholesale open access network and fibre infrastructure, followed
by data centre operations and property disposals.
    "One of the key strategic thrusts is to unlock the value
embedded in the company over the next 3-5 years," Maseko said.
    The partly state-owned landline and mobile operator said its
headline earnings per share, the main profit measure in South
Africa, rose by 25.4% to 2.19 rand ($0.1421) in the six months
ended Sept. 30 from 1.74 rand in the comparable period last
year.
    Its revenue was down marginally by 0.4% for the half year to
21.4 billion rand.
    
($1 = 15.4157 rand)    

 (Reporting by Promit Mukherjee; Editing Olivia Kumwenda-Mtambo,
Muralikumar Anantharaman and David Evans)
 ((promit.mukherjee@thomsonreuters.com; +27 64833 4448;))
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