Telkom set for lengthy wait on KT future
Cabinet has asked the minister of the Department of Communications, Dina Pule, to report back to it about all the options that are available for Telkom in three months time, after government blocked the SA operator’s deal with KT Corp.
Shares in Telkom closed 8.34% lower to R21 on the JSE, giving the group a market cap of just more than R10.9 billion, from a value of R19.5 billion in June 2011.
Telkom advised shareholders on Friday (1 June) that the potential strategic venture with KT Corp will not go ahead.
“Telkom has been informed by the Honourable Minister of Communications that the proposed transaction between the companies had been presented to cabinet on 30 May 2012 and that cabinet had taken the decision not to support the transaction as proposed,” the group said in a statement on Friday.
In a statement of its own, the DoC said: “In considering the proposed deal between Telkom and South Korea’s KT Corporation, cabinet took into account the fact that the Department of Communications is driving the Government policy of rolling out broadband, in partnership with the private sector, to all citizens by 2020.
“Telkom is a key and strategic asset in the rollout of this telecommunications infrastructure and in the effort to improve the skills of our citizens. Government recognize the need for Telkom to implement an urgent turn-around strategy, and to get the company back on its critical centre of delivering ICT services to all South Africans, new options will be considered by both Telkom and government in this regard,” the DoC said.
It noted that cabinet had asked Pule to report back to it about all the options that are available for Telkom in three months.
Government has a 39.8% direct ownership of Telkom.
In May, Telkom announced that it had reached an agreement regarding the terms of a potential strategic venture with KT Corporation, however, at a revised cash issue price due to a decline in its share price.
KT had been set for a strategic equity shareholding of 20% in the post-issue ordinary share capital of Telkom by way of a specific issue of shares for a cash price of R25.60 a share, down from an initial price of R36.06 a share.
I-Net Bridge reported that minister in the Presidency Collins Chabane did not give any indication as to Cabinet’s actual reason to reject the bid.
“Telkom is a strategic asset in the communications space that needs to be helped to become a functional entity that is a profitable backbone of telecommunications services,” Chabane said.
He also said it was important for Telkom to get the help it needed to support the development of the necessary information communications and technology skills the country needed.
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