State will not sell Telkom to help Eskom – Cwele

SOUTH Africa would not sell its stake in telecoms company Telkom as part of a plan to raise funds for electricity needed to spur economic growth, Telecommunications Minister Siyabonga Cwele said.

Finance Minister Nhlanhla Nene said in September that the government would sell assets to give utility Eskom R20 billion in support and increase bond guarantees.

The electricity provider faces a R225bn funding shortfall until March 2018 as it builds plants to meet demand and end rolling blackouts.

While Nene did not specify which assets would be sold, Telkom had been discussed by analysts including Owen Nkomo, the head of Inkunzi Investments, as a potential target.

“We’re not selecting Telkom because we want it to give internet; we want connectivity,” Cwele said in an interview at the Mobile World Congress in Barcelona on Monday. “It is strategic. We’re not going to sell Telkom.”

The government owns a stake of almost 40 percent in Telkom, which is valued at about R17.6bn.

Africa’s largest fixed-line operator will lead the expansion of broadband internet access to every household by the end of this decade, according to the National Infrastructure Plan.

“Telkom is aware of the strategic role that it can play in South Africa,” spokeswoman Jacqui O’Sullivan said. “Telkom will drive collaboration between the government and industry to create a truly connected, digital nation.”

Telkom shares declined 0.5 percent to R84.51 earlier in the day yesterday, paring the gain for the year to 21 percent.

The shares closed the day up 0.13 percent at R85.

Eskom intended to invest R138bn in the three years to March 2018, according to the National Treasury. The government will give the utility R20bn this year and another R3bn in 2016, to be funded through the selling of state assets.

South Africa favoured a sale of its 13.9 percent stake in wireless operator Vodacom Group, people familiar with the matter said last month.

While the stake is valuable to the country, it is not a longterm investment, according to Cwele.

“I wouldn’t say that long term we’ll need it… but it is a useful investment to us,” he said. “It brings a lot of revenue into the government. But it’s not so key in terms of delivering the services to the people.” – Bloomberg