Telkom South Africa Ltd. (TKG), Africa’s largest fixed-line telephone company, said discussions with South Korea’s KT Corp. (030200) are advancing as the companies seek to conclude a transaction “as soon as possible.”
KT Corp., based in Seongnam, has been in talks to buy a 20 percent stake in Telkom for 36.06 rand per share, valuing the deal at 3.8 billion rand ($505 million).
A review of potential business cooperation and benefits with South Korea’s largest phone and Internet company has “been substantially completed,” Pretoria-based Telkom said in a statement today. “Discussions continue to be positive and collaborative.”
The talks are “going well,” KT Corp. Chairman Lee Suk Chae said on March 7. KT Corp. may cut the price of the offer or abandon the transaction as Telkom’s stock has dropped since the announcement of the talks, Absa Asset Management and MMI Asset Management said on Feb. 29.
Telkom’s shares have declined about 20 percent since the offer was announced on Oct. 14. The stock traded at 25.85 rand as of 12:13 p.m. today in Johannesburg.
Telkom faces an antitrust fine of as much as 3.25 billion rand for abuse of market dominance and anti-competitive practice by charging excessive prices for services to other industry participants before the Pretoria-based Competition Tribunal. The company has denied the charges, and judgment is still pending.
The South African government holds 39.8 percent of Telkom while a South African state pension fund manager, the Public Investment Corp., owns 10.9 percent, according to data compiled by Bloomberg.
To contact the reporter on this story: Sikonathi Mantshantsha in Johannesburg at firstname.lastname@example.org
To contact the editor responsible for this story: Kenneth Wong at Kwong11@bloomberg.net