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Telkom shares dive as Korean talks end

Jul 13 2012 14:06
I-Net Bridge

Johannesburg – Telkom [JSE:TKG] shares dropped 4% in midday trade on the JSE on Friday‚ soon after the operator announced that it had ended potential strategic venture between Telkom and Korean group KT Corporation.

“Shareholders are advised caution is no longer required to be exercised by shareholders when trading in the company’s securities. Further announcements will be made as required‚” Telkom said.

The proposed strategic venture between Telkom and KT Corporation was near maturity a few weeks before the government’s decision.

“At the moment Telkom needs to come up with a new strategy‚ competition is stiff. The investor expectation was that KT would bring expertise to move Telkom forward - now the company has lost that competitive advantage‚ which affected the shares‚” Leticia Nkumbula‚ telecoms analyst at Africa Analysis‚ said.

The two parties had reached an in-principle agreement regarding the terms of the venture‚ including a revised cash issue price for the new Telkom ordinary shares to be issued to KT.

Had the venture been implemented‚ it would have resulted in KT acquiring a strategic equity shareholding of 20% in Telkom with the companies entering into a five-year co-source management services agreement to formalise the relationship and identify areas of mutual strategic and business co-operation.

At 13:19 Telkom shares were trading 2.25% lower.

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