Telkom rubbishes talk of rights issue to fund spectrum bid

Telkom on Thursday rubbished market talk that it plans to do a right issue to fund its participation in the upcoming spectrum auction to be led by communications regulator Icasa.

The operator issued a statement on the JSE’s stock exchange news service (Sens) on Thursday afternoon after TechCentral e-mailed questions to the company asking about rumours of an impending rights issue.

“Shareholders are advised that Telkom has no intention to do a rights issue. In the unlikely event where the board takes a decision to issue shares, an official announcement through Sens will be issued to inform all shareholders,” it said.

The company added that it “remains comfortable with its balance sheet with a net debt to Ebitda (earnings before interest, tax, depreciation and amortisation) of 0.7x as reported for the period 31 March 2020. There has been no increase in debt since our annual results for the period 31 March 2020.”

The market speculation may have started when Telkom, on 7 August, issued its annual report and notice of AGM, which is taking place on 10 September. The board is requesting general authority for directors to issue shares for cash, which Telkom described as a “standard resolution passed annually”.

Increased threshold

“In the upcoming AGM, the board is requesting to increase the threshold from 5% to 10%. Although the board does not expect to issue shares, it has taken a view to increase the threshold to provide the board agility and flexibility to enable an effective post-Covid-19 response, should this be necessary.

“The board would like to reiterate that the amendment of the resolutions is not an expression of Telkom’s intention to issue shares to the market.”

In a separate statement sent to TechCentral, the company denied market talk that its chairman, Sello Moloko, engaged on AGM resolutions ahead of time and “did not float ‘the idea among some investors’ (TechCentral’s words in its e-mail to Telkom) as the board has not taken any decision to do a rights issue.  — © 2020 NewsCentral Media

Duncan McLeod is Editor of TechCentral.
This article was first published on TechCentral, here.