Sellers hang up on Vodacom as its name takes a battering
Shares dip to a five-year low on Monday on the back of a spate of bad financial news and reputational damage
Vodacom, the mobile operator that is lurching from one public-relations crisis to another, saw its shares dip to a five-year low on Monday.
The stock closed 3.1% lower at R116.16 on the day – the worst level since February 2014. The selloff was triggered by a disappointing trading update on January 24, though the company’s woes have been compounded by reputational damage.
In December, Vodacom was targeted by EFF protestors after the party’s leaders were depicted by Corruption Watch chairperson Mavuso Msimang as “abusers of democracy” during the Vodacom Journalist of the Year awards ceremony.
EFF members then vandalised Vodacom stores before the network operator and the party called a truce – much to the horror of some EFF opponents.
Less than two months later, Vodacom is taking another hit to its reputation. This time, members of the ruling party in Gauteng are upset at the amount Vodacom wants to pay the man behind the Please Call Me service.
The operator reportedly settled on an amount of R49m for Nkosana Makate, though some are calling for it to fork over a staggering R70bn.
Calls for a boycott of Vodacom’s products, and the events it sponsors, have come at a tough time for the group.
On January 24, Vodacom shocked the market when it said service revenues in SA declined 0.9% in the quarter ended December as data revenue growth ground to a halt.
That led analysts from Investec and New Street Research to downgrade their recommendations on the stock.
If a boycott finds traction, things could get even worse.