Sipho Maseko opens up about failed Telkom bid

Sipho Maseko

Former Telkom CEO Sipho Maseko said shareholders should decide whether the deal they put on the table benefits them or not.

Last week, the Telkom board said it had decided not to continue discussions with the consortium, which approached it with an unsolicited, non-binding offer.

The consortium comprised Maseko’s Afrifund, Axian Telecom and the Government Employees Pension Fund, managed by the Public Investment Corporation (PIC).

Business Times reported that the Maseko consortium initially offered R46 a share for a controlling stake in Telkom.

Telkom CEO Serame Taukobong said the company is worth over R60 per share, and any suitors should see that as a benchmark before making an offer.

In the case of the Maseko consortium offer, Taukobong said no due diligence was done, and that is where the matter had ended.

“It is the board’s view that the indicative proposal is not in the best interest of shareholders and that the current strategy will yield better value for shareholders,” Telkom said.

A spokesperson for the consortium told Business Day that their offer was fair and the value creation strategy was sound.

He added that the deal would have resulted in Telkom becoming one of the pan-African telecommunications champions, with a sustainable financial framework for the future.

“Apart from an informal meeting with the CEO and chairman, we have not had the opportunity to address the board on the merits of our offer,” he said.

“We have therefore been denied the opportunity to explain the price’s rationale and negotiate price and terms with the Telkom Board.”

“We regretfully conclude that our ambition to conduct a friendly board-supported transaction has been rebuffed.”


Speaking to The Money Show, Maseko said Telkom has valuable infrastructure, including a large fibre network, towers, and data centres.

This infrastructure is the core ingredient to ensure South Africa is prepared for the looming digital revolution.

“In partnership with Axian, we intend to integrate their towers, data centres, and fibre to create a pan-African digital infrastructure business,” Maseko said.

He explained the PIC was going to add its holding in Telkom to the consortium which would bring the Maseko consortium’s holding in Telkom to 51%.

“All other shareholders would have had to proportionally dilute and exempt everyone from selling all of their shares,” he explained.

They would have given shareholders an option:

  • There is an immediate liquidity event where shareholders would get the cash directly.
  • They have the option to remain invested as the consortium unlocks value over the next three to five years.

He said the government, which is the largest Telkom shareholder, would have had to participate in the scheme like other shareholders.

Maseko said he discussed the plan with the government, PIC, and other shareholders before approaching Telkom with an offer.

He was disappointed with Telkom dismissing the deal before they had an opportunity to address the board and explain their proposal.

“Ultimately, the people who need to decide if we are wrong are shareholders. We would have at least expected the Telkom board and management would put it in front of shareholders,” he said.

“We think our value proposition to shareholders is better than the current trajectory as they get a liquidity event upfront and can stay invested.”

“On the other hand, Telkom has suspended its dividend. Even if they made another deal, shareholders would not see a dime of it.”

Maseko does not like the idea of a hostile takeover, saying he hopes there will be an alignment with Telkom’s management and board in future.

“We don’t prefer a hostile approach. For now, there is no proposal on the table that is being considered,” he said.

“We will most likely walk away from this. If a transaction has to be done at some point, it will be done.”

Daily Investor asked Telkom for comment about Maseko’s views, but it said it “does not comment on market speculation”.

“Telkom is confident that its shareholders will support the organisation’s strategy as it will provide the best return for shareholders,” it added.