Telkom South Africa Ltd.’s proposed sale of a 20 percent stake to KT Corp. (030200) won the backing of Public Investment Corp., the state-owned money manager that’s the phone company’s second-biggest shareholder.
KT “is an accomplished player in the industry and therefore such a tie-up could have positive benefits for Telkom,” Maqhawe Dlamini, general manager of listed equities for the Pretoria-based PIC, said in an e-mailed response to questions.
Telkom, Africa’s largest fixed-line phone company, said on Oct. 14 that it will sell new shares to Seongnam, South Korea- based KT, the Asian country’s biggest phone and Internet company, at 36.06 rand a share. The PIC, which manages about 1 trillion rand ($124 billion) in government-employee pensions, owns 11.1 percent of Pretoria-based Telkom, Dlamini said.
“The potential dilution is not a concern for the PIC as the new shareholder does have the necessary experience to change the game quite substantially for Telkom,” Dlamini said.
The KT proposal represents a 12 percent premium on Telkom’s stock’s closing price of 32.15 rand a share a day before the announcement. The Congress of South African Trade Unions, the country’s largest labor federation, said on Oct. 17 that it opposes the transaction.
The South African government is Telkom’s biggest investor with a direct stake of 39.8 percent as of March 31, according to Bloomberg data. The office of Communications Minister Roy Padayachie, the government’s representative shareholder, said it couldn’t immediately comment as he is on a visit to Kenya.
Telkom rose 0.4 percent to 32.16 rand at the close of Johannesburg trading. That pared the stock’s decline this year to 15 percent.
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