This damsel in distress has rejected many suitors over the years, and recently the local telecommunications company has seen another suitor making a bid for Telkom.
Telkom SA SOC Limited (JSE: TKG) has been making headlines again, driven by media speculation that the troubled integrated communications and IT services company has received another takeover bid. In the cautionary announcement Telkom released earlier in the month due to the speculation, the company confirmed receiving an unsolicited non-binding indicative letter. The letter was from an investment consortium led by Sipho Maseko, former CEO of Telkom, and now a board member of Shoprite, Axian Telecom and the Government Employees Pension Fund. The 35% stake has, however, been rejected by the Telkom Board, stating that the consortium failed to convince the board that it could follow through with the transaction.
Looking at Telkom’s broader weekly price action, we can see that the share price has been volatile over the last year. The broader price action has started forming a technical triangle pattern, which has seen price breakdown lower in May while the price has moved back into the triangle’s upper resistance.
If we look closer at the daily chart, we can see a significant price gap filled with extreme volatility in the share price driven by news events. We could possibly expect that if the R30.00 share support level (solid black line) does not hold, then the possibility exists for the price to move lower to the next level of support around R28.00 (red dashed line).
To negate the downward pressure, the price needs to move and preferably close above the overhead resistance (green dashed line) around R34.00 a share. This will bring the possibility of the significant broader resistance (solid red line) into focus around R36.27 a share.
Sources: Telkom SA SOC Limited, JSE SENS, BusinessDay, TradingView.
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