Government’s Telkom sale may be off the table

Sipho Maseko

Telkom CEO Sipho Maseko said on Monday that it appears government has walked back — at least for now — on a plan to sell a portion of its stake in the telecommunications operator, though he admitted anything remains possible.

Last year, former finance minister Malusi Gigaba raised the possibility of selling a portion or possibly all of government’s stake in Telkom to raise money to plug a financial hole at the national carrier, South African Airways.

But in response to a question from an analyst at Telkom’s annual financial results presentation, Maseko said talk about a possible sale of Telkom had “gone very quiet”.

“You can make a deduction, in a sense,” Maseko said. “Last year, there was a desire to avoid a rating downgrade. That hurdle has effective been passed.”

He said Gigaba had plugged a gap in the fiscus by raising the rate of VAT from 14% to 15%, along with other revenue-raising measures. He said it’s likely, too, that government will seek to “assault the cost base” of the state, which should reduce the need to raise additional funds through a sale of Telkom shares.

“We might not be high up on the chopping block,” Maseko said. “They’ll have to say so themselves officially, but in different conversations with them it does look like the appetite is not as accentuated as it was. But who knows?”

He added that he met with President Cyril Ramaphosa at the weekend. Describing him as a “very decisive guy”, Maseko said he “didn’t get a sense” that a sale of government’s stake in Telkom is high on the list of priorities.

Government directly owns 40.5% Telkom. This number has increased from 39.3% last year due to a share buyback programme.  — © 2018 NewsCentral Media