Telkom withdraws cautionary on government share sale

Telkom. (Duncan Alfreds, Fin24)
Telkom. (Duncan Alfreds, Fin24)

Johannesburg – Telkom [JSE:TKG] has withdrawn a cautionary announcement which indicated that government was considering reducing its shareholding.

On August 30, the telecoms group issued a note to shareholders on government’s proposal to reduce its 39% stake in the telecommunications firm.

But on Thursday the group said that it is withdrawing this announcement. “Telkom is not aware of any current decision taken by the Government with regards to its shareholding. Therefore, Telkom is withdrawing the cautionary announcement and caution is no longer required to be exercised when dealing in Telkom’s securities.”

In August, Democratic Alliance MP Alf Lees asked Deputy President Cyril Ramaphosa about a leaked memo proposing that government provide a R10bn bailout for struggling state-owned enterprise South African Airways (SAA) by selling Telkom shares.

Later, at a briefing following a meeting with the CEO Initiative, Finance Minister Malusi Gigaba spoke out against the “hysteria” created around the refinancing of the national carrier. “The fact is R10bn capitalisation is required for SAA, the form or source of recapitalisation is not finalised,” Gigaba said at the time.

Jabu Mabuza, chair of the CEO Initiative and Telkom, who was also at the briefing, urged government to be mindful of pronouncements that could have an impact on price sensitive shares.

“Please Minister, your colleagues - whether leaked or not leaked - when dealing with options, if they are a listed entity like Telkom, I urge due circumspection. Do not create unnecessary problems.”

When asked about the context for withdrawing the cautionary, Telkom executive for group communications and business support Gugulethu Maqetuka said it was just a matter of procedure.

“When you issue a cautionary at some stage you have to go back to your audience, in this case the JSE, to indicate where the situation stands. So there’s no substantial announcement behind it.”

Fin24 understands that cautionary announcements are withdrawn when talks collapse, or if agreements are reached between parties.

Treasury declined to comment on the matter.

Telkom’s share price rose from R56.12 to R58.81 after the withdrawal was made. It was at R56.43 at 11:20.

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