South Africa govt decides not to support Telkom/KT Corp deal.

By bne IntelliNews June 4, 2012
South African majority state-owned telecoms operator Telkom said the government had taken a decision not to support the deal for a potential strategic venture between Telkom and South Korean telecommunications company KT Corporation. Telkom and KT, South Koreas second-biggest mobile operator, had been in discussions since October 2011 to confirm areas of mutual strategic and business cooperation and benefits of a potential deal. In May, the parties said they had reached an agreement in principle but had yet to present it to shareholders and still needed to fulfill some conditions. According to the agreement, Telkom should issue 130 million new shares for KT, equal to a 20% stake, for a total of ZAR 3.33bn (EUR 316.6mn). The potential strategic venture had received in principle support by South Africas government. But Minister of Communications Dina Pule informed Telkom that the proposed transaction had been presented to the cabinet last week, and it then decided "not to support the transaction as proposed". South Africa controls 50.7% of the former fixed-line monopoly, as the government holds a 39.8% stake and the Public Investment Corporation (PIC), an investment management company wholly owned by the government, owns 10.9%. The KT deal would dilute the governments shareholding to about 32%. Telkom said its board of directors will meet Pule to discuss the cabinets decision and its implications. "A further announcement will be made in due course," it added. Telkom has said it hopes the KT deal to accelerate its key strategic projects, enable growth in broadband penetration, enable the transfer of skills, and reduce operating costs and capital expenditure.

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