Bloomberg News

Telkom South Africa May Sell 20% to South Korea’s KT Corp

October 14, 2011

(Updates with Telkom’s mobile unit in third paragraph.)

Oct. 14 (Bloomberg) -- Telkom South Africa Ltd., Africa’s biggest fixed-line phone company, said KT Corp., South Korea’s largest phone and Internet operator, may acquire a 20 percent shareholding in the company.

Telkom’s shares climbed as much as 7.3 percent to 34.50 rand in Johannesburg. The Pretoria, South Africa-based company may sell new shares to KT at a price of 36.06 rand each, Telkom said in a statement to Johannesburg’s Stock Exchange News Service today. The city’s Business Day newspaper reported earlier that the transaction could be worth as much as 4.6 billion rand ($586 million), citing unidentified people close to the companies.

A large partner may help Telkom fight increasing competition that has cut profit while the deal provides a growth opportunity for KT. Telkom aims to capture 15 percent of South Africa’s mobile-phone market in the next four years through its wireless service 8ta, which started a year ago.

KT “can’t grow any more in the domestic market,” Choi Nam Kon, a Seoul-based analyst at Tong Yang Securities Inc. said. “They can only seek growth outside Korea. Africa is the last remaining market for mobile operators.”

Telkom traded 3.2 percent higher at 33.17 rand as of 3:33 p.m. KT’s shares rose 2.5 percent to close at 36,800 won in Seoul, while the benchmark Kospi Index added 0.7 percent.

Telkom Earnings

Telkom is 39.8 percent held by the South African government while a South African state pension fund manager, the Public Investment Corp., owns 10.9 percent, according to data compiled by Bloomberg.

The proposed venture won’t change Telkom’s strategy or lead to job losses, Telkom said in an e-mailed statement today. Patrick Craven, spokesman for the Congress of South African Trade Unions, didn’t immediately respond a call to his mobile phone and Matankana Mothapo, spokesman for the Communication Workers Union couldn’t immediately comment when Bloomberg News reached him on his mobile phone today.

KT is looking for investment opportunities, with a focus on emerging markets such as central America and Africa, after agreeing to sell its 80 percent stake in Russian carrier New Telephone Co. Inc., the company said in May.

Telkom said on Sept. 29 it will lose about 650 million rand on the sale of Nigerian unit Multi-Links Telecommunications Ltd. and six-months earnings per share may decline by at least 70 percent. The company said on Feb. 10 that it would offer voluntary severance packages to reduce its 23,000-strong workforce and improve profitability.

Telkom’s initial public offering in 2003 was the only major state asset sale by the African National Congress-led government. The party in 2007 resolved to halt government asset sales to create a “developmental state” that would use government companies to boost growth and job creation.

--With assistance from Saeromi Shin in Seoul and Janice Kew in Johannesburg. Editors: Robert Valpuesta, Antony Sguazzin, Karl Maier

To contact the reporters on this story: Carli Lourens in Johannesburg at; Jun Yang in Seoul at

To contact the editor responsible for this story: Antony Sguazzin at

The Aging of Abercrombie & Fitch
blog comments powered by Disqus