Johannesburg - Telkom [JSE:TKG] shares plunged to an eight-year low as
the fixed-line company says the government will not back its partnership with
South Korea’s KT Corp.
South Korea’s No. 2 mobile operator last month cut its offer
for a 20% stake in Telkom by nearly a third, bringing the total sale value down
to about R3.3bn.
Telkom shares are down 3.97% to R22, after earlier touching
R21.81, their lowest since March 2004.
Telkom, which is majority owned by the South African
government, said the proposed deal was presented to cabinet on May 30 and did
not get the support it needed.
"Telkom was informed by the Minister of Communications
... that (the) cabinet had taken the decision not to support the transaction as
proposed," it said in a statement.
Telkom said it will discuss the implications of the
cabinet's decision with the minister.
Battered in recent years by steadily falling fixed-line
revenue and expensive blunders in Nigeria, Telkom has been looking to offset
shrinking demand for its core business by pushing into new businesses and markets.
The company has also been struggling to keep up with bigger
Johannesburg-based African mobile operators MTN Group [JSE:MTN] and Vodacom
Group [JSE:VOD].
KT has been scouring for opportunities in Africa, Latin
America and Eastern Europe seeking to grow earnings as competition back home
heats up.