Telkom tanks nearly 5% to new low
Analysts warned that Telkom’s delisting was becoming a more distinct possibility after the group’s shares slid a further 86 cents, or 4.89%, to an all-time low of R16.74 on the JSE in noon trade.
The latest price trims the telecom group’s a market cap to R8.75 billion, some way off its competitors, with Vodacom at R138.7 billion, and MTN up to R289.59 billion.
The All share Index was up 0.43% to 34,436 points, while MTN improved 1.79% or R2.70 to R153.90, and Vodacom added 25 cents to R93.21.
“I am sure we can’t be far off from a delisting, with Telkom’s share price taking the beating,” a dealer at PSG Konsult told BusinessTech.
On 8 May 2012, Telkom announced that it had reached an in-principle agreement with KT regarding the terms of a venture that would see KT acquiring a strategic equity shareholding of 20% in Telkom by way of a specific issue of shares for cash at a cut price of R25.60 per new Telkom ordinary share.
However, the group advised shareholders on Friday, 1 June 2012, that the potential strategic venture with Korea Telecom Corporation would not go ahead.
Christopher Gilmour, analyst at Absa asset management for private clients said that government’s plan for Telkom was the $64,000 question. “Telkom’s deal with KT Corp was probably one of the last chances they had to make a serious play in the market,” he said, adding that by blocking the deal, it opened up a case “to say that government may want to delist the thing (Telkom).”
In June, Business Day newspaper reported that government, a top shareholder in Telkom, could delist and nationalise the struggling telecoms operator, citing a source close the communication department.
“The government is looking for a way to direct Telkom to meet its development agenda without being hampered by the rules of the JSE,” the nation’s leading business daily quoted the source as saying.
However, government reportedly denied that it has any plans to buy up more shares in the struggling encumbent.
The government owns 38.9% of Telkom — 51% if the Public Investment Corporation’s stake is included.
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