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 was informed last week (1 June) by the Minister of Communications, Dina Pule, that the proposed transaction had been presented to the cabinet of the South African Government and that cabinet had taken the decision not to support the transaction as proposed.
“I certainly still think that it is an option. Clearly we haven’t had time to engage government with regard to the three-month ‘consider all alternatives’ approach, but we obviously believe that we have considered those alternatives and this is a very good proposition, so we sincerely believe that it may pop up again.”
He said that communication from Korea based KT Corp had been constructive. “We’ve got an excellent relationship with them. They understand how governments work, we want to win together,” Schindehutte said.
Telkom noted that an in-principle agreement was reached following an extensive investigation period into the merits of the potential strategic venture spanning nine months by the management teams and advisors of KT and Telkom.
“Having considered all factors, the board of Telkom remains of the view that the Potential Strategic Venture would be in the best interest of Telkom, its employees, customers and shareholders. Telkom will continue to engage the South African Government further,” the group said in a statement on Friday (8 June).