Telkom SA’s share price slid 2.2 percent to R46.33 yesterday following a government announcement that the Special Investigating Unit (SIU) is probing the group’s disposals of its African businesses about 15 years ago. Picture: Thobile Mathonsi
TELKOM SA’s share price slid 2.2 percent to R46.33 yesterday following a government announcement that the Special Investigating Unit (SIU) is probing the group’s disposals of its African businesses about 15 years ago.
The probe has cast a pall over Telkom considering its share price has rocketed 216 percent since March 2020, earnings growth is strong – headline earnings are expected to rise in the year to end-March 2022, mobile user growth is robust and it is planning a listing of Swiftnet, its masts and towers business, on the JSE. The government owns 40 percent of Telkom and the Public Investment Corporation, which manages the Government Employees Pension Fund, 14 percent.
Mike Gresty, a fund manager at Anchor Capital, said although he was still ascertaining if there would be a financial impact on Telkom as possibly only certain individuals might be implicated in the investigation, it was “very strange that these issues are being brought up now after all these years”.
TechCentral editor Duncan McLeod speculated that President Cyril Ramaphosa’s surprise instruction to the SIU was likely more about him seeking to win re-election at the ANC conference in December.
Ramaphosa had made digital terrestrial television migration and the allocation of radio frequency spectrum to telecoms operators signature policies of his administration, but tensions between the government and Telkom over the licensing of radio frequency spectrum, including legal action, may prevent these from being delivered by December.
On Tuesday, the Government Gazette issued a notice giving the SIU authority to investigate contracting and possible maladministration regarding Telkom’s disposals of iWayAfrica, Africa Online Mauritius and MultiLinks Telecommunications.
“The aforementioned matters date back to as far as 2006 and have been repeatedly reported on in respective Telkom reports,” Telkom said in a statement yesterday.
Telkom disposed of Telkom International and Africa Online Mauritius, jointly grouped under iWayAfrica, as these were making losses. iWayAfrica’s website yesterday described itself as servicing more than 67 000 corporate subscribers and more than 20 000 consumer subscribers in 44 countries.
Meanwhile, Telkom had invested $410 million (R6.264 billion) over three years for 100 percent of Nigeria-based Multi-Links by 2009, but two years later sold it for only $10m to Helios Towers.
Multi-Links had made a R522m operating loss in 2009 and a R1bn operating loss the next year.
“Telkom will deal with the investigation on its merits in the appropriate forum, in the appropriate manner, at the appropriate time,” the group said yesterday. Telkom said also that it had followed “robust corporate governance principles” and had done so in executing the Telkom strategy to consolidate its operations in South Africa.
Telkom’s share price closed 0.30 percent lower at R47.26 on the JSE yesterday.
edward.west@inl.co.za
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