Telkom backs off af­ter cre­at­ing mar­ket frenzy

The Star Late Edition - - BUSINESS REPORT - Siseko Njobeni

TELKOM yes­ter­day with­drew its cau­tion­ary an­nounce­ment that ad­vised share­hold­ers the gov­ern­ment could re­duce its 39 per­cent in­ter­est in the com­pany – spark­ing a frenzy in the mar­ket that pro­ceeds from the dis­posal could be used to bail state-owned en­ti­ties.

In a note to share­hold­ers, Telkom said it was not aware of any cur­rent de­ci­sion taken by the gov­ern­ment with re­gards to its share­hold­ing in the com­pany.

“There­fore, Telkom is with­draw­ing the cau­tion­ary an­nounce­ment and cau­tion is no longer re­quired to be ex­er­cised when deal­ing in Telkom’s se­cu­ri­ties.”

Telkom spokesper­son Gugulethu Maqe­tuka said that the de­ci­sion to with­draw the an­nounc­ment was pro­ce­dural. “It was ei­ther we with­draw or re­new it,” said Maqe­tuka.

At the time of the an­nounce­ment in Au­gust, the gov­ern­ment’s stake in Telkom was worth R14.4 bil­lion with the com­pany say­ing the sale would ma­te­ri­ally af­fect its share price.

The Pub­lic In­vest­ment Cor­po­ra­tion (PIC), which cur­rently holds an 11.65 per­cent stake in the com­pany, was fin­gered as the likely buyer of the stake.

In 2015, the gov­ern­ment sold its 13.91 per­cent stake in Vo­da­com to the PIC to fund Eskom.

At the time, the gov­ern­ment’s stake in Vo­da­com was val­ued at R28.7bn.

The gov­ern­ment last month dipped into the Na­tional Rev­enue Fund and trans­ferred money to SAA to al­low the air­line to re­pay loans of R3bn Citibank. The Trea­sury said that the money would also be used to as­sist SAA with its im­me­di­ate work­ing cap­i­tal re­quire­ments.

In the state­ment an­nounc­ing the pay­ment of the money to Citibank, the Trea­sury said that im­prov­ing the fi­nan­cial po­si­tions of the air­line through re­cap­i­tal­i­sa­tion had been on the gov­ern­ment’s agenda for a while. It said the gov­ern­ment was ex­plor­ing sev­eral op­tions “and an up­date would be pro­vided dur­ing the medium-term Bud­get pol­icy state­ment on Oc­to­ber 25.”

Pan-African Cap­i­tal Hold­ings chief ex­ec­u­tive Iraj Abe­dian said it would be tan­ta­mount to throw­ing money into a bot­tom­less pit if the gov­ern­ment sold its Telkom stake to bailout the trou­bled SOEs, par­tic­u­larly SAA. If it was prop­erly run, the na­tional car­rier would have no prob­lem rais­ing money in the mar­ket

“At the moment, the banks have no con­fi­dence in the gover­nance of SAA. So the idea of us­ing money from Telkom to fund SAA is ir­re­spon­si­ble,” he said.

Abe­dian said SAA was in a bad state be­cause the gov­ern­ment was not will­ing “to do the right thing.” He said the gov­ern­ment should ap­point a “cred­i­ble” board and an ex­ec­u­tive team that can turn the air­line around.

Telkom shares de­clined 1.65per­cent on the JSE yes­ter­day to close at R55.50.


Telkom has with­drawn its cau­tion­ary an­nounce­ment.

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