Government to sell Telkom shares, Gigaba says - TechCentral

Government to sell Telkom shares, Gigaba says

Finance minister Malusi Gigaba said on Wednesday that government will sell a “portion” of its 39.3% stake in Telkom to ensure the fiscal expenditure ceiling is not breached.

“We have decided to dispose of a portion of government’s Telkom shares. We do not take this decision lightly, but we have had to in order to maintain the credibility of the expenditure ceiling,” Gigaba said in parliament, where he was delivering the 2017 medium-term budget policy statement.

He did not say how much of government’s stake in Telkom it plans to sell, or to whom. However, he did say government will have the option to buy back the shares at a later date.

The announcement comes just two weeks after Telkom withdrew a cautionary announcement it had issued in late August over speculation that government could sell its 39.3% stake in the company to bail out South African Airways, suggesting the operator may have been unaware that Gigaba would announce the sale plan in the speech.

Telkom’s shares have come under pressure in recent months over speculation that government was considering offloading its stake to help rescue SAA. The shares fell more than 4% on Wednesday after Gigaba’s remarks.

“Telkom is not aware of any current decision taken by the government with regards to its shareholding,” it said in the statement to shareholders and issued on the JSE’s stock exchange news service on 12 October.

Recent reports had suggested that Gigaba had been keen for the Public Investment Corp to buy government’s stake in Telkom, but that the PIC has baulked at the idea of buying the entire stake because of the risk of such a large exposure to one company.

A Telkom spokesman on Wednesday told TechCentral that the company cannot comment on decisions by shareholders.

In Wednesday’s speech, Gigaba said sluggish economic growth has caused a significant reduction in the tax revenue outlook and that this has significantly eroded government’s fiscal position.

Telkom shares

“Tax revenue is projected to fall short of the 2017 budget estimate by R50.8bn in the current year, the largest downward revision since the 2009 recession,” the minister said. “At the same time, additional appropriations of R13.7bn (are needed) to recapitalise SAA and the South African Post Office. These have been partially offset by use of the contingency reserve. A shortfall of R3.9bn remains. To ensure the expenditure ceiling is not breached, we have decided to dispose of a portion of government’s Telkom shares.”

Gigaba said the consolidated budget deficit will widen to 4.3% of GDP in 2017/2017, against a budget target of 3.1%.  — © 2017 NewsCentral Media

3 Comments

  1. The cANCer Government selling off assets (equities plus future dividends) is like a bankrupt family selling off the furniture in order to keep the wolf from the door. Only a matter of time before nothing is left to sell. Then they’ll start selling the children like in medieval times. Only here it will be the raiding the South African citizen bank accounts. The wealthy rich residents are already leaving the country in droves, taking their money and skills with them, and only the poor will stay behind, unable to contribute to the country’s coffers. The uneducated voting fodder in the ‘platteland’ will still support cANCer, because they are totally blind to the sheer mismanagement, corruption and theft committed by the current ruling (ruining?) party, whose fat cats are lining their and their cronies’ pockets with money which was supposed to go towards uplifting the poor and developing / maintaining infrastructure.

  2. No, SAA should be the very first SOE to be fully privatised, sold in bits and pieces or just closed down.
    The Parsitals that are the biggest drain on the taxpayers and easily can be privatised, as they are competing with private entities should be auctioned off ASAP.
    Eskom has the biggest debt of all the SOEs. In May 2017, Eskom had around R350bn of debt financing. Net debt is around
    R320bn, and was expected to borrow around R50bn gross per year going
    forward. Not sure about the latest figures, but they are probably only worse.
    Eskom can be split up in 3 or 4 powerproducers and a company that runs
    the grid. Gov should maybe only own a part of the grid company, as it is
    a monopoly.
    In that scenario energy regulator NERSA should act as a truly independent watchdog over the sector, and together with
    competition authorities and environmental agencies guard us from price
    fixing and environmental disasters.
    Gov should only keep a broad
    oversight and create the right framework and guidelines, like the
    desired energy mix for the future.
    This is what happened to the energy sector in most west European countries 20-40 years ago.

  3. Ofentse Letsholo on

    I totally agree with you 100%. I think the reason why the government keeps on helping these companies it’s the thought of employed people losing their jobs. But I fully agree with you.