Fin24

Telkom shares plunge to 8-year low

2012-06-01 09:48

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.