Telkom SA Ltd. said South Africa’s Cabinet won’t support a plan to sell a 20 percent stake in Africa’s biggest fixed-line operator to KT Corp. of South Korea.
Details of the proposed transaction were presented to Cabinet on May 30 and Communications Minister Dina Pule told Telkom yesterday that a decision was taken not to back it, the Pretoria-based company said in a statement today. The government directly owns 39.8 percent of Telkom and state-controlled pension fund Public Investment Corp. holds 10.9 percent.
KT, South Korea’s biggest phone and Internet provider, on May 8 offered to pay 25.60 rand a share, or about 2.68 billion rand ($315 million), for the stake, 29 percent below an Oct. 14 offer of 36.06 rand a share. The transaction may dilute the government’s holding in Telkom to below 50 percent as it would require the issue of new shares to KT.
Telkom’s board “will be engaging with the Honourable Minister of Communications to discuss Cabinet’s decision and the implications thereof,” the company said.
Shares in Telkom have declined 29 percent to 22.91 rand since the companies first announced they were in talks, compared with a 7.5 percent gain in the benchmark FTSE/JSE Africa All Share index.