(Updates with share price in fifth paragraph, Telkom comment in last paragraph.)
Aug. 30 (Bloomberg) -- Telkom South Africa Ltd., Africa’s largest fixed-line phone operator, is “considering a major transaction in Africa” and may announce details soon, Communications Minister Roy Padayachie said today.
“The board is busy with a major deal,” Padayachie said today in an interview on the sidelines of the company’s annual shareholders’ meeting in Johannesburg. “Telkom will make an announcement soon.”
The minister was responding to questions about whether Telkom will make an acquisition in the rest of Africa after it sold its investment in Nigeria’s Multi-Links Telecommunications Ltd. Telkom bought Multi-Links for $410 million in 2007 and spent a total 9.8 billion rand on the Lagos-based company before announcing its disposal for $10 million on June 28.
The government is Telkom’s major shareholder with a direct 39.8 percent stake and controls another 10.89 percent through the Government Employees Pension Funds, which invests the pensions of the state’s employees, according to the company’s annual report for the year ended March 31.
Telkom shares pared gains of as much as 2.7 percent, to close 0.9 percent higher at 35 rand at the 5 p.m. close of Johannesburg trading.
Padayachie, representing the government’s shareholding, wouldn’t comment any further. ”You have to be patient, Telkom will make the announcement when the time is right, but the board is busy with a deal,” he said.
Speaking at the meeting, Telkom chairman Lazarus Zim had said the company still wants to make acquisitions outside its home market of South Africa after its failure with Multi-Links, which never reported a profit while Telkom owned it. He said the company needed to build a sustainable business in Africa.
”There were expensive and important lessons that we learnt in Nigeria,” said Zim.
Telkom has ”not identified attractive acquisition targets in Africa at this juncture,” company spokesman Pynee Chetty said in a written statement. The group’s focus ”is currently to improve the performance of existing” businesses, he added.
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