South Africa considers sale of Telkom stake

South Africa’s government says it’s open to discussing the disposal of its Telkom stake, in an effort aimed at rescuing cash-strapped South African Airways, reports ITWeb.
Finance minister Malusi Gigaba has reportedly engaged with several cabinet ministers, including telecommunications minister Siyabonga Cwele, about the option of selling the stake in the telecoms group.
The government holds a majority stake in Telkom, with 39.75 percent of shares valued at about ZAR 14 billion (US$1.1 billion).

South African Airways

South African Airways needs a ZAR 10 billion (US$786 million) bailout to boost business operations, according to reports. Although Cwele previously supported government’s “correctness to invest in turning around” Telkom instead of selling the stake, but the department would not be drawn to comment on the latest sale rumors. Department spokesperson Siya Qoza said as a matter of principle, the minister does not comment on Cabinet matters before they have been finalized.

Telkom also noted it does not comment on decisions by shareholders.
Meanwhile, Telkom CEO Sipho Maseko said the government’s proposed sale of its stake would probably not affect operations. Maseko said Telkom would consider its options, including a buy-back, once there was a formal process.

It emerged in Parliament that the state sees the sale of non-core assets as the only sustainable way to support South African Airways.
Deputy President Cyril Ramaphosa said the government continued to discuss which assets were strategic.

According to Ramaphosa, if that proposition (selling the Telkom stake) comes up, Parliament will deal with it.
Telkom management, led by Maseko, had substantially reduced costs, which were a drain on the group. The business recorded improved performance in the year to June.

Source: Telecompaper