Fin24

Telkom nationalisation on the cards

2012-06-19 08:33

Johannesburg - The government, a top shareholder in Telkom [JSE:TKG], could delist and nationalise the struggling telecoms operator, Business Day newspaper reported, citing a source close the communication department.

“The government is looking for a way to direct Telkom to meet its development agenda without being hampered by the rules of the JSE,” the nation’s leading business daily quoted the source as saying.

Earlier this month, the government, which together with the state-run pension fund hold over 50% of Telkom, rejected KT Corp’s $385m offer for a stake in the company, saying the firm was a strategic asset in its plan to roll out internet to all South Africans by 2020.

The deal would have diluted the government holding to less than 50%.

Analysts have said the rejection of KT’s offer underscored the apparent determination of the government not to cede control of a company that many in the ruling African National Congress view as an arm of government.  

The ANC last year tried unsuccessfully to roll back approval for Walmart's $2.4bn acquisition of retailer Massmart Holdings [JSE:MSM].

A communication department spokesperson could not be immediately reached for comment.

Telkom, in which the government and a state-run pension fund own more than 50%, gained as much as 7.86%. It gave up some of those gains to trade 4% higher at R21.16 by 07:24 GMT.

 

Comments
  • mark.singh.9889 - 2012-06-19 09:09

    Once Telkom is naitionlised, Neotel will be the favourite landline opertor in SA

      malcolm.macleod.562 - 2012-06-19 16:28

      Once Telkom is nationalized we can kiss local loop unbundling goodbye, and along with it all hopes of ever having decent internet. Neotel will probably end up being made illegal.

  • hc12345 - 2012-06-19 09:33

    The whole episode of issuing shares were a moneymaking scheme. They have milked it and now we the public will have to foot the bill to buy back all those worthless shares. Maybe they should investigate who made the most profit from reselling their shares.

      ryan.a.smith.3958 - 2012-06-19 10:04

      haha, all those thumbs down because we all hate telkom and hate government (telkom's biggest shareholder). but HC i dont think you know too much about finance. firstly, let me tell you that even though telkom has been destroying shareholder value, has poor management and made some costly and poorly advised acquisitions (like Links in Nigeria), the shares are definitely not worthless. you can buy the company at a substantial discount to book value (net equity). however, unless the company turns around its downward spiral, that cushion won't count for much. and HC, explain your last sentence, because that just sounds like twiddle.

      ryan.a.smith.3958 - 2012-06-19 10:06

      telkom is just another example of government fiddling in the private sector. they should get out. they can barely run the country, and then they want to be involved in business too.

      eric.martinsich - 2012-06-19 10:15

      The Americans made the big money. They sold all the buildings which is now owned by a British Company/BEE company who rents the buildings to Telkom and others.They were responsible for cutting around 30,000 jobs. The majority of those that lost their jobs was black and coloured contruction workers who are now being paid peanuts by construction companies that contract to Telkom. The Americans made around 5 Billion Rand when they sold their shares and left the country. Privitisation in this country is leading to more job losses and sharehoders reaping the profits

      malcolm.macleod.562 - 2012-06-19 16:31

      He means the shares are worthless to the tax payer Ryan, not the people currently holding them. I am inclined to agree, the only value we would get for them is to watch as what remains of our useless industry is destroyed.

  • nick.athinodorou - 2012-06-19 09:34

    Absolute lunacy! telkom should have been privatised. This nationalisation of Telkom merely continues its ineffective and inefficient management. It will be further run into the ground and will only suck further scarce tax money into keeping it going. This will result in fewer SAn's having access to proper telecommunication facilities by 2020,never mind more.

  • thutothegreat - 2012-06-19 09:42

    There goes hopes of a 40meg standard ADSL line in south africa..

  • ACvanNiekerk - 2012-06-19 09:53

    And here you have it folks - the laugh of the day. Let's look at all the other sterling examples of how the government has managed enterprises...

  • mnbain - 2012-06-19 10:01

    Privatise a national company - Rape the consumer through monopolistic practices. Then Nationalise it again. It does not seem to me that the interests of the public are at the centre of this issue.

  • andile.mali.73 - 2012-06-19 10:30

    A few months ago the government refuted the notion of nationalisation and they are reverting to it again. I guess Malema's idea of nationalisation is being reconsidered.

  • badballie - 2012-06-19 10:31

    These government owned business's are simply used as profit making enterprises by government. If one looks at these business's, Telkom, Spoornet, Transnet, Kyknet(customs) Eskom etc ad nausea. One finds they all have one thing in common, inexplicably high charges for little or no service. Without free and fair trade we are simply going to continue to have our salaries extorted by the ANC led government which does what it likes irrespective of what the people want anyway.

  • Jan - 2012-06-19 11:14

    Pres. Zuma is buying off the trade unions, with this nationalization, so he can stay out of jail.

  • nigel.vanysendyk - 2012-06-19 12:27

    Telkom will be used as a vote machine at our expense. They won't have any shareholders getting in their way while they use our tax money to run a loss making organization to make up of all the votes they are losing because of their uselessness, won't be 5 years before it is completely bankrupt, one thing is for sure, high speed internet will remain a pipe dream in ANC controlled SA.

      Kenna - 2012-06-19 18:13

      Indeed, but the more sarfies I talk to, regardless of race/religion, see the ANC for what it is. Lying, thieving, scum.

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