Telkom CEO Sipho Maseko said they have not been given a heads-up from the government about plans to dispose of its Telkom shares.
The government is desperately short of money amidst the COVID-19 pandemic, and it has many assets which it can easily convert into cash.
One of the assets which are on top of the list of being sold is the government’s 40.5% shareholding in Telkom.
In January, Bloomberg reported the Ramaphosa administration was accelerating the sale of government assets to fund SAA and other distressed SOEs.
Assets high on the list for sale included part of the state’s stake in Telkom and prime properties on Cape Town’s waterfront.
It is, therefore, no surprise that there is now speculation that the government may dispose of its Telkom shareholding to improve its financial position.
This speculation was fuelled by a rise in Telkom’s share price ahead of the announcement of its financial results on Monday.
Telkom’s share price increased from R17.90 on 29 May to R27.50 by Friday 19 June, which included an 11% increase on Friday.
The image below shows Telkom’s share price increase over the past month, before its financial release for the year ended 31 March 2020 on Monday.
Telkom CEO Sipho Maseko comments
Speaking to The Money Show’s Bruce Whitfield, Maseko said he has a lot of sympathy for Minister of Finance Tito Mboweni, who is set to deliver a special budget speech on Wednesday.
Maseko said he never wants to lose shareholders, especially a large shareholder like the government.
“If they have to dispose of their shareholding, given their size, we hope it will be done in a way which does not destroy value for other shareholders,” said Maseko.
He added that they have not been given a heads-up from the government about any plans to dispose of its Telkom shares.
“Shareholders generally don’t tell us when they plan to do these sorts of things,” said Maseko.
Previous plans to sell Telkom shares
Should Mboweni announce plans for the government to sell its shares in Telkom to free up money, it will not be the first time it has happened.
In October 2017, former finance minister Malusi Gigaba said the government was planning to sell some of its shares in Telkom to meet increased expenditure.
He said sluggish economic growth in 2017 has caused a significant reduction in the tax revenue outlook which has significantly eroded the government’s fiscal position.
“To ensure the expenditure ceiling is not breached, we have decided to dispose of a portion of government’s Telkom shares,” Gigaba said.
This plan was shelved with former telecommunication and postal services minister Siyabonga Cwele saying in November 2018 the plan to sell the government’s stake in Telkom was no longer an option.
Before that – in May 2012 – Telkom announced that it had reached an in-principle agreement with Korea telecoms firm KT Corp to acquire a strategic equity shareholding of 20% in the company.
However, shortly after this announcement former communications minister Dina Pule said the cabinet had taken the decision not to support the transaction as proposed.
In a statement by the cabinet on 1 June 2012, it said Telkom is a key and strategic asset in the rollout of broadband and the effort to improve the skills of citizens.
“Government recognise the need for Telkom to implement an urgent turn-around strategy, and to get the company back on its critical centre of delivering ICT services to all South Africans, new options will be considered by both Telkom and government in this regard,” Cabinet said.
Now read: Telkom’s results explained in 5 simple slides
Sourced from: MyBroadband. View the original article.
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