June 5 (Bloomberg) -- KT Corp., South Korea’s second-largest mobile-phone operator, shelved its plan to buy a 20 percent stake in Telkom South Africa Ltd. after the South African government said it opposed the sale.
Plans for the purchase were set aside and may be revived depending on what the South African government asks for, Yung Kim, senior executive vice president for strategy planning and investment at Seongnam, South Korea-based KT, said in a phone interview today. “If it’s something we can solve, we can talk again. We don’t have a clear idea on what the problem is.”
South Africa’s Cabinet won’t support the plan, Pretoria-based Telkom said on June 1, leading shares in Telkom to drop to an eight-year low that day. The government is Telkom’s largest owner with a 39.8 percent stake, and state-controlled pension fund Public Investment Corp. holds 10.9 percent, according to data compiled by Bloomberg.
South African Communications Minister Dina Pule told reporters on June 4 KT’s 2.68 billion rand ($315 million) offer wasn’t enough to support Africa’s largest fixed-line operator. Telkom has said it will speak with the minister to clarify its position. The government said its decision took into account the role Telkom will play in increasing access to services.
KT climbed 1.2 percent to 29,100 won at the close of Seoul trading. The shares have dropped 18 percent this year, compared with a 1.3 percent decline in the benchmark Kospi index. Telkom gained 1.5 percent to 21.31 rand in Johannesburg trading yesterday.
The South Korean carrier, which last month reduced its offer to 25.60 rand a share for the holding from the Oct. 14 proposal of 36.06 rand a share, isn’t discussing raising the price, Kim said. A 20 percent stake would be worth about 2.2 billion rand at yesterday’s closing share price.
Telkom told KT it will continue discussions with the South African government, which will make a final decision on the offer in three months, Kim said.
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