Gungubele: Government won’t sell its stake in Telkom

The government has no intention of relinquishing its majority share in Telkom, according to Communications and Digital Technologies Minister Mondli Gungubele. 

This comes after Telkom’s share price soared on Monday after the partly state-owned company’s confirmation that it was being courted for acquisition by a consortium led by former chief executive Sipho Maseko. 

In an interview with the Mail & Guardian, Gungubele said he would be “very much worried if Telkom were to sell its majority stake [or] if the government were to support a majority stake somewhere else”.

“I still believe the future of Telkom lies in this current relationship they have with the government now and any other strategic relationship they deem fit,” he added.

The consortium, reportedly made up of Maseko’s Afrifund, Axian Telecom and the Government Employee Pension Fund managed by the Public Investment Corporation, is believed to be gunning for a controlling stake in Telkom. The government is the biggest shareholder with about 40%.

Gungubele said Telkom was still a strategic entity in helping South Africa leverage connectivity on the African continent. 

“The kind of permutations that they are going to engage in — taking into account the infrastructure they command — is the only way Telkom guarantees green shoots, medium and long term. As far as I’m concerned, Telkom is still strategic to the government’s programme,” he said.

Telkom shares plummeted more than 30% in a single day last month after warning of a R13 billion writedown and a decline of as much as 105% in its annual earnings. 

Gungubele said the company was going through a complex phase but the future looked bright in the medium term.

“Telkom is looking at unlocking its value because Telkom holds the biggest infrastructure. So how the government and Telkom relate and complement one another is going to go a long way,” he said. 

“Where I am sitting, Telkom is reorganising leadership and I think Telkom will be fine.”

On Sunday, the Business Times reported that Maseko had presented Telkom with an offer of R46 a share. The offer, according to the report, was allegedly rejected for being too low and not in the best interests of Telkom shareholders.