Telkom, a state-owned telecommunications company, is in the early stages of a takeover deal with MTN Group, according to a shareholders letter that surfaced on the internet. on Friday.
Is Telkom on the verge of being sold to MTN Group?
Shortly after Mteto Nyati, a well-decorated former head of MTN South Africa, was announced as Telkom’s new chief executive, a letter sent to shareholders of Africa’s second-largest telecoms network surfaced, noting that “MTN ant Telkom SA SOC Limited have entered into discussions in relation to MTN acquiring the entire issued share capital of Telkom in return for shares or a combination of cash and shares in MTN.”
As reported by Fin24, these developments saw Telkom’s share price rise 28%. MTN’s share price also saw a moderate 3% increase.
“The transaction, if concluded, may have a material effect on the price of the Company’s securities. Accordingly, shareholders are advised to exercise caution when dealing in the Company’s securities until a further announcement is made,” the shareholders’ letter read.
The South African government is currently the majority shareholder of Telkom with 40% ownership. The Public Investment Corporation (PIC) is the second largest shareholder with a 13% stake.
“Discussions are at an early stage and there is no certainty that the Transaction will be consummated,” MTN warned investors.
Here’s how many state-owned companies have been lost to private interests
At this juncture, not much can be made of the touted Telkom takeover, except that it will be a prime opportunity for retail investors to polish their portfolios.
More importantly, at a political level, the sale of a state-owned parastatal may fall under intense scrutiny, especially at a time when the Public Enterprises Ministry has recently come under fire for supposedly selling off the country to private interests.
In the event that the sale of Telkom goes through, it would mark the second time a state-owned enterprise is handed over to private ownership.
Following a gruelling negotiation process that went on for eight months, our national carrier, South African Airways (SAA) was offloaded from the public balance sheet and sold to Takatso Consortium, a group made up of Harith General Partners and Global Aviation.
Details of the deal remain sealed but insiders believe the government could receive R3 billion from the sale, paid over a period of three years.
Eskom is another state-owned entity under scrutiny over suspicion that it may be sold to private interests. In fact, Economic Freedom Fighters (EFF) leader Julius Malema was on record, at Thursday’s media briefing, accusing President Cyril Ramaphosa and Public Enterprises Minister Pravin Gordhan of lining up the sale of the embattled power supplier to figures in the United States and Britain.
The result of these concerns, Malema warned, will be a national shutdown that will not be peaceful. The date of the nationwide protests has yet to be established.