Telkom has been dealt a giant blow by government after cabinet rejected the fixed-line operator’s plan to sell 20% of its equity to Korean telecommunications giant KT Corp.
The news will come as a setback to Telkom’s management team and its CEO, Nombulelo Moholi, who was pushing for the deal. Telkom has been negotiating the proposed transaction for at least the past nine months.
Telkom appears taken aback by the cabinet decision. In a statement it says the transaction was first mooted by government.
In May, Telkom reached an in-principle agreement regarding the terms of the proposed strategic venture. However, the deal, if it were to happen, first had to cross a number of hurdles, including gaining the support of the SA government.
However, communications minister Dina Pule informed Telkom on Thursday that the proposed deal, which had been presented to cabinet on Wednesday, would not be supported in its current form.
Telkom says it will engage with Pule to discuss the cabinet decision and the implications thereof, with a further announcement to be made “in due course”.
The telecoms company’s share price was trading down by more than 5% on the JSE at lunchtime on Friday. This is the lowest level for the share since 2003. — (c) 2012 NewsCentral Media
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