Cosatu opposes Telkom's Korean tie-up

2011-10-17 16:10

Johannesburg - Cosatu has come out against the further privatisation of Telkom through a possible shares acquisition by a South Korean company.

The deal would not benefit ordinary citizens, Cosatu said on Monday.

"Telkom stands out as an example of what can go wrong in privatisation... worse services for the poor, high job losses and improvements only for business and the rich," said spokesperson Patrick Craven.

"They have reversed all the gains they previously made as a public entity and the poor have gained nothing out of this process."

He said Cosatu condemned a proposed deal in which KT Corporation would take on a 20% stake in Telkom which is majority owned by the government.

The proposed deal, said to be worth R4.6bn would give the South Korean company a strategic equity shareholding of 20% in the post-issue ordinary share capital of Telkom.

Telkom would issue new shares for cash at a price of R36.06. Telkom had been looking at ways to offset losses incurred by its mobile business and a failed expansion into Nigeria.

Craven said the ultimate goal of private companies was to maximise profit. He said an increase in local telephone charges had made telecommunications inaccessible to citizens.

"Local charges rose 35% even after inflation in the past two years. At the same time, we saw a 40% fall in the cost of international phone calls, which mostly benefits business and the rich."

Telkom listed on the Johannesburg Stock Exchange in 2003. The state has a 50.7% stake in the company.