• Noakes soap opera

    How many millions more will be sunk into a seemingly pointless vendetta, asks Mandi Smallhorne.

  • Downgrade scenarios

    An analyst takes a look at how credit downgrades have affected countries around the world.

  • Supply chain benefits

    It may be unsexy but developing your supply chain brings big gains, says Ian Mann.

All data is delayed
See More

SA seems ‘closed for business’

Jun 03 2012 16:11
Edward-John Bottomley

Company Data


Last traded 76
Change 0
% Change 0
Cumulative volume 1273860
Market cap 0

Last Updated: 22/05/2017 at 05:00. Prices are delayed by 15 minutes. Source: McGregor BFA

Related Articles

Investors hang up on Telkom

Telkom shares plunge to 8-year low

Telkom: Govt not backing KT deal

Govt rejects R3.3bn Telkom-KT deal


Johannesburg – A national embarrassment is what experts call the failed deal between Telkom [JSE:TKG] and the South Korean KT Corporation.

On Friday government announced that it did not support the massive deal between the two telecommunications companies – after more than nine months of negotiations.

André Wills, managing director of Africa Analysis, said one had to ask why the deal was turned down at such a late stage. Government had surely been part of the negotiations, and cabinet approval should have been a mere formality.

KT, South Korea’s largest provider of telecommunications services, wanted to acquire 20% of Telkom’s shares for R3.3bn. It had initially offered R4.7bn, but last month reduced its offer following the decline in Telkom’s share price over the past year.

The deal had the support of several experts, especially as Telkom needs the injection of cash and expertise.

Arthur Goldstuck, managing director of World Wide Worx, said the decision is not in the interests of either Telkom shareholders or consumers.

“It hangs a label around South Africa’s neck saying that we are closed to business. It points to protectionism and an attempt to keep a stranglehold on the country’s communications network.”

At Friday morning’s media conference Collins Chabane, Minister in the Presidency responsible for monitoring performance and evaluation, confirmed that cabinet had turned down the transaction.

Government owns 39.8% of Telkom, and more than 50% if the Public Investment Corporation’s stake is included.

Government spokesperson Jimmy Manyi stated that the decision had been taken because government, via the department of communications, wants to give all South Africans broadband by 2020.

Telkom is a strategic asset in this effort. Government acknowledges that Telkom needs to put in place an urgent turnaround plan, he said.

Communications Minister Dina Pule has to report to cabinet within three months regarding Telkom’s options.

The news sent Telkom’s share price down to its lowest level in eight years. It closed at R21 on Friday, a decline of 8.34%, and it has lost 44% of its value since the high of R37.50 in July last year.

“I think what we are seeing here is a struggle between developed and developing markets,” said Wills.

“Interested parties have different priorities. What’s good for Telkom may not be what government thinks is good for the company.”

According to Goldstuck, government's decision means a protracted decline for Telkom. “We’ll have a long wait before the telecommunications industry is free.”

For the man in the street this means that the price of broadband services will not fall dramatically, and that the company will not invest in new technology.

Marian Shinn, DA spokesperson on communications, described government’s decision as short-sighted.

“If we turn our back on KT Corp and the company looks for friendlier investment partners elsewhere on the continent, South Africa will rank even lower on the list of technologically advanced countries in Africa.”

Marius Croucamp, Solidarity’s spokesperson, declared the decision a “fiasco”. In his view it could lead to Telkom having to cut costs owing to a lack of capital, leading to the retrenchment of thousands of workers.

The poor impression of South Africa created by this decision will be extremely difficult to mend, he said.

Over the weekend the JSE said that it would review the recent trades in Telkom shares.

Thursday saw significant trade in the company’s shares – even before government’s announcement. This resulted in the Telkom share price shedding 4.9%.

Experts attributed the trade to the fact that Telkom was to be removed from the MSCI South Africa Index the next day, owing to the decline in its market value.

The stock exchange told Bloomberg that it would refer the matter to the Financial Services Board should further investigation be required.

 - Sake24

For more business news in Afrikaans, go to Sake24.com.

kt corporation  |  telkom



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Almost all working South Africans fear losing their jobs

Previous results · Suggest a vote