Telkom. (Duncan Alfreds, Fin24)
Cape Town – Telkom has advised its shareholders to exercise caution when dealing with its shares, as it announced government’s proposal to reduce its 39% stake in the telecommunications firm.
“Shareholders are advised that Telkom’s major shareholder, the Government of the Republic of South Africa, is currently considering various strategic options with regards to partially reducing its current approximate 39% shareholding in Telkom,” Telkom said in a statement on Wednesday.
“The implementation of government’s Telkom proposal may have a material effect on Telkom’s share price," it said. “Accordingly, shareholders are advised to exercise caution when dealing in Telkom’s securities until a further announcement is made in this regard.”
Telkom shares were trading 1.45% lower on Wednesday at 09:15 at R61.20 a share.
This comes after Democratic Alliance MP Alf Lees revealed in Parliament a confidential Cabinet memo outlining government's proposal to sell its stake worth about R14.4bn in a bid to recapitalise South African Airways (SAA), which requires a R10bn bailout.
Finance Minister Malusi Gigaba, who is leading the proposal with three other ministers, said the option to sell the stake is not a done deal. However, he made it clear that they need to recapitalise SAA and that they can’t unsettle the current fiscal plan.
Gigaba previously said that the practice of selling assets to fund state-owned entities without offsetting the budget occurred before, when government sold the Public Investment Corporation's (PIC) R23bn stake in Vodacom to give Eskom a bailout in 2015.
The PIC, which currently has an 11.65% stake in Telkom, is a likely candidate to purchase the stake.
The finance minister came under fire this week from trade federation Cosatu, after he allegedly told it the state could dip into PIC funds to capitalise other state-owned companies, according to a report in Business Day on Wednesday.
"The minister was saying we should not have an assumption that this is something (the PIC) that can never be used and can never be touched because some of the benefits of what we are trying to target are national economic matters that affect everyone, including the people who are pension holders," Gigaba’s spokesperson Mayihlome Tshwete told the paper.READ MORE ON THE PROPOSAL:
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