Government late on Friday finally provided the first insight into why cabinet torpedoed a proposal by Telkom to sell 20% of its equity to Korea’s KT Corp. The decision, taken on Wednesday and announced by Telkom on Friday morning, sent the telecommunications operator’s share price plummeting lower.
Now, in a statement issued by the department of communications, government explains that selling the stake — which would have diluted other shareholders’ equity in the company — would run counter to its plans to improve access to information and communications technology services.
“The government of SA has adopted a policy position to beef up its infrastructure for the next seven years, particularly in rural areas,” the statement reads. “In considering the proposed deal between Telkom and South Korea’s KT Corp, cabinet took into account the fact that the department of communications is driving the government policy of rolling out broadband, in partnership with the private sector, to all citizens by 2020.”
The statement continues: “Telkom is a key and strategic asset in the roll-out of this telecoms infrastructure and in the effort to improve the skills of our citizens. Government recognises the need for Telkom to implement an urgent turnaround strategy and, to get the company back on its critical centre of delivering ICT services to all South Africans, new options will be considered by both Telkom and government in this regard.”
Cabinet has asked communications minister Dina Pule to report back to it about all the options that are available for Telkom in three months’ time, the statement says.
Telkom has been negotiating the sale for the past nine months. It’s understood it had the support of former communications minister Roy Padayachie. — (c) 2012 NewsCentral Media
- See also: Telkom share pummelled on KT news