Telkom shoots down former CEO’s takeover bid
Telecoms group Telkom has withdrawn a precautionary notice to shareholders surrounding the unsolicited bid by a consortium to acquire a controlling stake in the group.
Telkom confirmed in June that it had received an unsolicited bid from a consortium led by former CEO Sipho Maseko (Afrifund Investments Proprietary Limited), comprising Axian Telecom and the Government Employees Pension Fund, managed by the Public Investment Corporation to acquire a stake in the company.
At the time, the company said it was considering the bid and warned shareholders to trade with caution.
However, this warning has been withdrawn, with Telkom choosing to reject the offer.
“Having considered the proposal, (Telkom) has decided not to continue discussions with the consortium,” it said.
It said that the Telkom board believes that the proposal “is not in the best interest of shareholders and that the current Telkom strategy will yield better value”.
The takeover bid came amid severe financial issues at Telkom, which just posted a R10 billion loss in its latest financial year.
The group is working on several strategies to get its business operations to a point of profitability, including an entire shift in focus.
Telkom attributed its losses to higher handset costs, increased competition and operational expenses.
“The migration of revenues from legacy to newer technologies, our investment in the Mobile post-paid base to drive higher annuity revenue, and the impact of sustained load shedding put pressure on our operating costs,” it said.
Serame Taukobong, the group CEO of Telkom, said that competition increased in the mobile, fibre and IT services businesses.
Taukobong said that in response to the increased competition, the company has embarked on a ‘cost transformation journey’ to return the group’s profitability to above 25% in the medium term while driving revenue growth.
The group said that moves to restructure its businesses, including retrenchments in its workforce, will start reflecting in better performance in 2024 and 2025, while “ongoing investments in new technologies will become more apparent”.
In the meantime, the group is continuing with a retrenchment process that will affect 1,700 workers. 1,200 workers have already accepted voluntary retrenchment and early retirement packages.
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