Shares in Telkom dropped as much as 3.79% in early afternoon trade on the JSE on Friday (13 July) after the group withdrew its cautionary announcement, effectively ending any hope of a deal with KT Corp.<\/p>\n
By 13:00 shares in Telkom slumped 69 cents, or R3.79%, to R17.51\u00a0after the group advised that caution is no longer required to be exercised by shareholders when trading in its securities. Telkom’s market cap has been trimmed to a little over R9.2 billion.<\/p>\n
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.<\/p>\n
However, the group advised shareholders on Friday (1 June) that the potential strategic venture with Korea Telecom Corporation would not go ahead.<\/p>\n
On 11 June, Jacques Schindehutte, Telkom chief financial officer, said that KT Corp remains an option for the group, despite government\u2019s initial rejection of the deal.<\/p>\n
\u201cI certainly still think that it is an option. Clearly we haven\u2019t had time to engage government with regard to the three-month \u2018consider all alternatives\u2019 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.\u201d<\/p>\n
A local dealer told BusinessTech: \u201cThe drop is related to a cautionary announcement put out by Telkom and is aligned to its proposed deal with KT Corp. Guys have hit the sell button as this announcement effectively ends any hope there may have been for a deal to be done.\u201d<\/p>\n
At the start of June, Telkom lost more than 5% as investors reacted to the news that its deal with KT Corp had been blocked by government, while the decline has been exacerbated by rumours of nationalisation and a delisting from the JSE.<\/p>\n
Shares in MTN, meanwhile, rebounded following several days of declines. MTN added R3.11, or 2.19%, to R144.81, while Vodacom also improved, adding 58 cents to R93.87.<\/p>\n
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