The market loves Telkom’s massive price cuts as shares surge

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The market reacted positively to Telkom’s disruptive contract packages – announced late Thursday evening – with shares up 4.20% in afternoon trade on Friday.

The telco launched its new FreeMe contract packages, which offer aggressive prices and simplify its product offering.

Subscribers are able to select the amount of data they want, and then pay for off-network calls, while MyBroadband reported that contract subscribers will also be able to switch to  one of the new packages from an existing contract from 24 July.

Shares in Telkom climbed R2.70, to R67.20 by 14h20 on Friday afternoon on the JSE.

In comparison, rival mobile operators declined, with Vodacom down 1.35%, or R2.24, to R163.96, while MTN lost 0.5% to R144.20.

MTN reported earlier this week that a poor financial performance in Nigeria and South Africa – on top of a massive fine being imposed by the Nigerian government – will push the company’s headline earnings per share into the red.

MTN said that expects to report negative basic headline earnings per share (HEPS) and basic earnings per share (EPS) for its half-year results for 2016, compared to the reported HEPS of 654 cents and EPS of 653 cents in the year prior.

Details of the new FreeMe contract packages:

Each contract includes free calls and messaging on WhatsApp, BBM, and Viber, as well as free on-network calls and 50 free SMS messages per day.

The contracts are priced as follows:

  • 1GB: R99
  • 2GB: R149
  • 5GB: R299
  • 10GB: R399
  • 20GB: R599
  • Unlimited: R999

Prepaid subscribers will be able to buy these packages as monthly bundles at the same price.

The free messages and calling on WhatsApp, BBM, and Viber are limited to 2GB of usage per month.

Free calls to Telkom Mobile and Telkom fixed-line numbers have a fair usage limit of 3,000 minutes per month.

The 20GB and Unlimited packages include free calls to other network operators, limited to 1,500 and 3,000 minutes per month respectively.

Out-of-bundle and top-up rates on FreeMe contracts are as follows:

  • Voice: R0.69 per minute, billed per second.
  • Data: R0.29 per MB.
  • SMS: R0.30 per message.

The contracts will be available from 25 July.

Telkom FreeMe prices

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