Telkom soars ahead of cabinet meeting
Investors appear to be taking a punt on Telkom shares on the chance that government decides to buy out minority shareholders.
Telkom’s share price was trading up by more than 5% in mid-afternoon trade on the JSE on Monday ahead of a cabinet meeting scheduled for Wednesday at which communications minister Dina Pule is expected to set out three strategic options for the fixed-line telecommunications operator.
The share price had traded up by as much as 7,5% earlier in the day on talk that cabinet may decide to buy out minority shareholders in Telkom and renationalise the company as part of plans to use the company to advance its plans for a state-led deployment of broadband infrastructure.
Telkom is trading well above its all-time low of R17,02/share, set on 27 July, but is still down by more than 40% year on year over concerns about the company’s strategy and worsening financial position.
TechCentral reported last week that Pule will present three separate options on Wednesday to cabinet on the future of Telkom, which was listed in 2003 on JSE and the New York Stock Exchange. The US listing has since been terminated.
Pule’s spokesman, Siya Qoza, said last week that he was not in a position to communicate what the three options were ahead of the cabinet meeting.
Cabinet had given Pule until the end of August to provide a report on what should happen to the operator, in which government continues to hold a direct 40% stake.
“The minister and her colleagues at the inter-ministerial committee have worked very hard with government officials and Telkom to trim the list of options to three,” Qoza said.
The committee was made up of Pule, defence & military veterans minister Nosiviwe Mapisa-Nqakula, finance minister Pravin Gordhan, public enterprises minister Malusi Gigaba and state security minister Siyabonga Cwele.
Telkom said at the end of May that Pule had told the company that cabinet had decided not to support a proposed transaction to sell 20% of Telkom’s equity to Korea’s KT Corp, despite the two parties engaging in more than nine months of due diligence. — (c) 2012 NewsCentral Media