Telkom (TKG) – More bang for their buck

We contextualize Telkom’s growth in the mobile sector which continues to grow ahead of the market. Telkom’s deep passive sharing with Vodacom could catalyze the buildout of their mobile network and provide margin support and significantly lower capex intensity. Telkom’s slowdown in capex deployment is rational given the saturation in fibre in the metro areas and the need to consolidate connectivity in these areas. In our opinion, the distribution of high demand spectrum could reinforce the dominance of the incumbent mobile operators in SA. However, there appear to be signs that the authorities could be reconsidering the WOAN.