The South African government won’t dump its Telkom shares its planning to sell to the market, says Telkom CEO.
During his medium-term budget speech, Finance Minister Malusi Gigaba confirmed government plans to sell a portion of its shareholding in Telkom.
Sipho Maseko, Telkom CEO, said the company has met with the government to discuss the sale process and they will probably say less about it now.
“I think they are following a slightly more structured process (to sell a portion of their shareholding).
“There’s probably a universe of a buyer or buyers they are talking to. So, they will be more structured I don’t think they will dump their shares. They are being thoughtful about it,” said Maseko.
Gigaba said the 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.
Maseko said initially government didn’t manage the process to sell a portion of its shares in a right way.
“Given the recent interactions with them, we think they will be both sensible and thoughtful how they manage the process.”
The South African government is to sell a portion of 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 must pay lenders R15.963 billion in 2017.
The South African government owns 39.3% shareholding in Telkom.
Today, Telkom posted slower sales growth and a decline in headline earnings on Friday, as intense competition and weak consumer spending impacted the company’s growth.
It reported on Friday that operating revenue declined slightly by 0.6 percent to R20.1 billion for the first six months to end-September, mainly impacted by the weak operating environment.
The company also said headline earnings per share (HEPS) declined by 7.4% to a 30.3.9 cents because of lower revenue. HEPS is South Africa’s main profit gauge.
Telkom’s CEO Sipho Maseko said the company’s performance was negatively impacted by the challenging economic environment.