Telkom to be sold at R24 a share, nationalised: analyst

Telkom is likely to be re-nationalised, with government set to offer R24 a share for the group, giving it a market cap of approximately R12 billion. This is the opinion of an analyst at PSG Konsult.

Shares in Telkom rallied 4.32% to R19.31 by close of play on the JSE on Friday (14 September), giving the group a market cap of R10 billion – a far cry from its approximate worth of R20 billion a year ago.

Telkom’s shares have tumbled from a year-to-date best of R29.75, and a year best of R34.47, to a low of R17.02.

The Department of Communications (DoC) is set to present a list of three strategic options for Telkom to cabinet later this week.

The analyst believes that nationalisation is the most likely outcome, citing that nationalisation was a topic for discussion during the ANC’s national policy conference held in June.

Last month, ANC Treasurer, General Mathews Phosa told Bloomberg that there were discussions about delisting (Telkom) inside the party; however he would not comment further.

The analyst noted that government sees Telkom as key strategic asset in the rollout of telecommunications infrastructure, and wants to meet its ambition of rolling out broadband to all citizens by 2020.

He estimates that the group may-well be sold off at 25% of its premium price – at R24 a share. He opined that there were many obstacles still facing Telkom as a business, including the fact that 8ta continues to “burn cash”.

In May, KT Corp and Telkom agreed a deal whereby the Korean-based telecoms firm would acquire a strategic equity shareholding of 20% in the post-issue ordinary share capital of Telkom, by way of a specific issue of shares for cash.

Having blocked the deal on 30 June, Cabinet asked the minister of communications, Dina Pule, to report back to it about all the options that were available for Telkom, in three months. That deadline has since expired.

The DoC said in a statement last week: “The Minister and her colleagues at the Inter-Ministerial Committee have worked very hard with government officials and Telkom to trim the list of option to three. These three options will be presented at the next Cabinet meeting that is scheduled for next week.”

“The Government views Telkom as a strategic asset in the rollout of ICT infrastructure in the country, and is moving with speed to find a lasting solution that will make Telkom sustainable,” the DoC said.

Government owns 38.9% of Telkom — 51% if the Public Investment Corporation’s (PIC) stake is included.

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Telkom to be sold at R24 a share, nationalised: analyst