The government isn’t interested in selling its 40% stake in Telkom, communications minister Mondli Gungubele said on Tuesday.
Telkom and government are in advanced talks to partner in rolling out broadband products even as buyers flock to bid for the telecommunications company’s assets.
The partnership will involve Telkom’s businesses such as the Openserve fibre unit, the government’s Broadband Infraco and broadcast transmission services provider Sentech, communications minister Mondli Gungubele said on Tuesday.
“We have almost agreed on how the partnership will work, we are at modalities now,” Gungubele said in an interview at Telkom’s office in Pretoria. The government isn’t interested in selling its 40% stake in Telkom, the minister said.
Telkom, which reported its first loss in a decade in the year ended 31 March, has seen a flurry of proposals to acquire the company’s assets just as South Africa’s third-largest mobile phone company warned of a potential asset writedown of about R13-billion.
The latest offer saw the firm’s former CEO Sipho Maseko offering to acquire a 35% stake in Telkom, with partners Axian Telecom and the Public Investment Corp to form a larger African infrastructure and telecoms business. MTN Group also made an offer for Telkom last year.
‘Take advantage’
“We cannot stop people in being interested in Telkom,” chairman Geoffrey Qhena said in the interview along with the minister. “When the share price is low people want to take advantage.”
The company’s shares, which have risen 3.3% this year, dropped 0.2% at 9.50am in Johannesburg. Telkom in March said it was seeking to sell a stake in Openserve and hired Bank of America to gauge interest from investors.
Openserve operates around 170 000km of fibre and legacy landline copper cables. The government’s Broadband Infraco manages 15 000km of fibre.
The new partnership would assist the government fulfil its ambitions to connect 80% of South Africans in the next three years, Gungubele said, without giving details.
“The relationship we have with Telkom as a shareholder has huge potential to turn the country’s future around,” the minister said. — Loni Prinsloo and S’thembile Cele, (c) 2023 Bloomberg LP
