Why Telkom South Africa’s valuation has nosedived
When you look at the numbers, the story reads like a cautionary tale. In June 2019, Telkom South Africa boasted a market capitalisation of about R37.2 billion – roughly $2 billion at the time. Fast‑forward to May 2025, and that figure has slumped to R19.4 billion, barely over $1 billion. That’s a loss of R18 billion, or nearly 50 % of the company’s value, in just six years.
What makes the drop even more striking is that it follows a series of earlier crashes. After reaching a peak in 2007, Telkom’s market cap fell to R4.65 billion by mid‑2012. The steepest slide happened between 2008 and 2009, when the valuation plunged from R32.6 billion to R8.79 billion. Those years were marked by a frantic attempt to keep Telkom Media alive – the firm sold its 75 % stake in that unit to Shenzhen Media, a move that barely slowed the bleed.
Today, the company’s standing in the South African telecom market feels tenuous. Competition from mobile‑centric players, pressure on fixed‑line revenues, and the rise of over‑the‑top (OTT) services have all eroded traditional profit streams. Yet the biggest blow isn’t the market’s evolution; it’s a strategic choice made more than a decade ago.
The costly Vodacom divestment
Back in 2008, Telkom sold a 15 % stake in Vodacom to Vodafone for R22.5 billion and handed the remaining 35 % to its shareholders. At the time, the deal seemed logical – it raised cash and reduced exposure to a fast‑growing mobile operator. Fast‑forward to the present day, that 15 % slice would be worth roughly R42 billion, more than double Telkom’s entire market cap.
Even more startling is the missed opportunity of keeping the full 50 % stake. Based on current market prices, that half‑share would be valued at about R140 billion, translating to roughly $7.5 billion. In other words, if Telkom had held onto its Vodacom holding, it could have out‑sized its own market value by a factor of seven.
The Vodacom saga is more than a numbers game; it illustrates how short‑term cash grabs can cripple long‑term growth. By relinquishing ownership, Telkom also gave up a seat at the table of South Africa’s most successful mobile carrier, missing out on strategic synergies, cross‑selling opportunities, and dividend streams that could have steadied its balance sheet.
Industry watchers say the lesson is clear: telecom firms need to think beyond immediate cash needs. The sector is capital‑intensive, and stakes in high‑growth mobile assets often become the engine of future earnings. When a company sells that engine, it risks becoming a passenger on a shrinking road.
Telkom’s current challenges also reflect broader trends in the telecom world. Fixed‑line services, once the backbone of revenue, are shrinking as consumers shift to wireless and fibre. Meanwhile, the regulatory environment in South Africa adds another layer of complexity, with price caps and spectrum allocations influencing profitability.
Investors are now wrestling with a stark reality: the company’s core business is under pressure, and the strategic misstep of 2008 continues to haunt the balance sheet. Some analysts suggest that a renewed focus on high‑margin data services, partnerships with content providers, and a possible re‑entry into mobile infrastructure could help reverse the slump.
For now, Telkom’s market value sits at roughly half what it was six years ago, a vivid reminder that the decisions made in boardrooms can echo for decades. Whether the firm can reinvent itself or remain a shadow of its former self will depend on how aggressively it adapts to the digital age and whether it can recover the strategic vision lost with its Vodacom stake.