Vodacom loses 7% in two days
Vodacom’s shares have retreated 7% in just two trading days, partly on speculation that the mobile operator’s British parent, Vodafone, could be coerced into selling non-European assets.
Vodacom’s shares have retreated 7% in just two trading days, partly on speculation that the mobile operator’s British parent, Vodafone, could be coerced into selling non-European assets.
The stock fell from R140.25 at the close of trade on Tuesday to R130.20 by Thursday’s close.
The share decline was due to profit taking in the wake of Vodacom’s recent share rally, “and speculation that an activist investor into Vodafone could push them to sell non-European assets”, said Mergence Investment Managers portfolio manager Peter Takaendesa.
But Takaendesa said he expected Vodafone to hang on to its South African unit, which was “actually performing better than most of their other assets”.
Vodacom has pared recent gains after the stock rallied nearly 12% in the five trading days following its quarterly trading update on July 24.
Its service revenues, excluding currency movements, grew 5.2% year on year in the three months ended June, down from 5.9% growth a year before.
According to media reports this week, US activist investor Elliott Management had bought a stake in Vodafone, whose shares still have a long way to go to return to the highs reached at the turn of the millennium.
JPMorgan’s UK analysts said in a report that if Vodafone was pushed to sell assets, Vodacom could be on the chopping block.
The US bank values Vodafone’s 65% stake in SA’s largest mobile operator at €13.3bn (R207bn).
Other assets Vodafone could sell included its business in Turkey, worth €4.4bn, its operations in New Zealand and Australia, worth €2bn, or its joint ventures in India, worth €6bn.
“Comments from Vodafone on recent results calls would seem to highlight that asset sales across New Zealand and Australia as well as India are already on the agenda,” JPMorgan said.
The bank said that the ongoing underperformance of the telecommunications sector lent itself to activist rhetoric and this could pressure some companies in the sector to consider “more drastic measures” to boost their share prices.