Telkom is effectively controlled by the government, which owns 40.51% in its own name, and the Government Employees Pension Fund (GEPF) owns 13.6% – giving the government an effective stake of 54.11%.
A consortium comprising former CEO Sipho Maseko’s Afrifund, Axian Telecom and the GEPF recently offered to acquire 34.9% of Telkom.
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.
The Public Investment Corporation (PIC) backed the bid led by former CEO Maseko, whose consortium said the 34.9% stake could also be combined with the PIC’s current shareholding to boost the group’s overall holding to over 50%.
This indicated that Maseko’s consortium was most likely looking to purchase the government’s stake to become the controlling shareholder with the PIC.
Speaking to The Money Show, Maseko said Telkom has valuable infrastructure, including a large fibre network, towers, and data centres.
“In partnership with Axian, we intend to integrate their towers, data centres, and fibre to create a pan-African digital infrastructure business,” Maseko said.
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.
Who owns Telkom
The GEPF’s investments are managed by the PIC, which has very close ties to the government, as Deputy Finance Minister David Masondo is traditionally the chairman of the PIC.
In 2021, Masondo was appointed chairman of the PIC, continuing the longstanding tradition.
In most cases, the PIC votes with the government, giving the government complete control of Telkom, hence its full name being Telkom SA SOC (state-owned company).
Telkom has always had close ties with the government as it was created out of the Department of Posts and Telecommunications (DPT), which was broken into Telkom and the SA Post Office on 1 October 1991.
Telkom’s privatisation journey started when the fixed-line operator joined forces with mobile giant Vodafone to start Vodacom.
It went one step further when it allowed Telekom Malaysia and SBC to buy a 30% stake in Telkom in 1997 through the Thintana consortium.
On 4 March 2003, Telkom was listed on the Johannesburg Stock Exchange (JSE) and the New York Stock Exchange (NYSE).
Although Telkom was delisted from the NYSE on 27 August 2009, it remains listed on the JSE.
Many people see Telkom as a private company and a good case study of what the government should do with struggling state-owned enterprises like Eskom, Denel, and SAA.
The reality is that it is essentially still under the control of the government, with the government owning 40.51% and the GEPF 15.13%.
By effectively controlling over 50% of Telkom’s shares, the government can say what goes.