South African Government on Wednesday confirmed plans to sell a portion of its shareholding in Telkom, South Africa’s biggest fixed-line telephone group.
During his medium-term budget speech, Finance Minister Malusi Gigaba, said the expenditure ceiling is threatened in the current year, as a result of government’s recapitalization of South African Airways and the South African Post Office.
“Government is disposing of a portion of its Telkom shares to avoid a breach, with an option to buy them back at a later stage,” said Gigaba.
He added that to ensure the 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.”
SA Govt is Selling Profitable Telkom to ‘Save’ Cash Guzzling SAA
The South African government is sell its profitable Telkom stake to bail out the national carrier, South African Airways (SAA).
In July, Gigaba revealed the need to sell state assets in a bid to inject nearly R16 billion into SAA so it can repay loans.
Gigaba revealed that SAA has to pay lenders R15.963 billion in 2017.
South Africa’s Telkom seems to be on everyone’s lips these days. However, for the first time in many years, the conversation is positive.
The stock has risen 264% in past year, giving the company a R34 billion market value.
Its main shareholder, the South African Government, might sell part or all of its 39.3% shareholding in the Telco that generated R3.9 billion in profit in the 2017 financial year.
In 2015, the government sold its 13.91% stake in Vodacom, South Africa’s biggest mobile phone operator by subscribers, to the Public Investment Corporation (PIC) to help fund the R23 billion allocation to the then struggling power utility Eskom.