Telkom shuts the door on KT Corp revival talks

While Korea Telecom (KT Corp) has seen yet another bid for a presence in Africa dissolved, Telkom says its discussions with the Korea based firm have been terminated.

KT Corp said Monday (14 April) that it had dropped its bid to buy Vivendi S.A’s controlling stake in Maroc Telecom.

“KT decided not to submit a bid for Maroc Telecom. Still, we can consider investing through various angles, such as business cooperation,” KT Corp. said in a filing to the Korea Exchange, citing price as the main barrier to a way forward.

KT Corp’s plans for a stake in the North African operator came only months after the group was denied a 20% stake in Telkom, due to opposition from the South African government.

On 8th May 2012, Telkom announced that it had reached an in-principle agreement with KT regarding a potential strategic venture.

The deal would have seen KT acquiring a 20% strategic equity shareholding in Telkom at a price of R25.60 per new Telkom ordinary share.

By lunch on Tuesday (16 April), shares in Telkom traded at around R13.64 on the JSE.

Telkom was informed at the end of May 2012 by the minister of communications, Dina Pule, that the proposed deal had been presented to cabinet which had taken the decision not to support the transaction.

According to Pule, KT Corp’s offer was too low to meet the group’s needs.

In publishing its annual results for the year ended March 2012, in June, Telkom then said:

“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.”

KT Corp itself had appeared to not close the door completely on the potential merger.

Jacques Schindehutte, Telkom chief financial officer, said that KT Corp remained an option for the group, despite government’s initial rejection of the deal.

“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.”

KT said in a statement in June 2012 that it may revive its interest in the deal: “We may revive the plan once we find out what the South African government wants and if the problem can be solved,” the company said.

However, Telkom told BusinessTech on Tuesday (16 April 2013):  “The discussions with KT have been terminated as communicated to the market at the time. Should the position change the required announcements will be made.”

More on Telkom and KT Corp

KT Corp still an option: Telkom CFO

Telkom deal with KT Corp not off the table: PIC

Telkom shares tank on KT Corp deal block

Telkom, Korea Telecom transaction not going ahead

Telkom agrees KT Corp deal at cut price

KT offer too low for Telkom’s needs: Pule

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Telkom shuts the door on KT Corp revival talks