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Telkom sell-off looks likely

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Telkom sell-off looks likely

The sale of Telkom to fund South African Airways looks more and more like a done deal.
Today, Telkom issued a cautionary to shareholders that points to the likelihood of it becoming a reality.
“Shareholders are advised that Telkom’s major shareholder, the Government of the Republic of South Africa, is currently considering various strategic options with regards to partially reducing its current approximate 39% shareholding in Telkom,” the cautionary reads.
“The implementation of Government’s Telkom proposal may have a material effect on Telkom’s share price. Accordingly, shareholders are advised to exercise caution when dealing in Telkom’s securities until a further announcement is made in this regard.”
Last week, the idea of selling off all or part of government’s Telkom stake to fund SAA’s debt was once again raised.
Finance Minister Malusi Gigabi tabled a proposal about whether government should sell it’s 39,75% share of Telkom, worth about R14,4-billion.
He stressed at that time that no decision has been reached, and today has suggested that the Public Investment Corporation (PIC) could also be approached to plough money into SAA. PIC manages government employees’ pension funds.
The Department of Finance has stated categorically that SAA will not be allowed to fail, and that selling it off to private investors is not an option.
Just last month, Gigaba outlined a plan to sell off state assets to fund the approximately R10-billion needed to stave off SAA’s creditors.