Telkom rejects takeover bid says ‘not in the best interest of shareholders’

The Telkom board has decided to walk away from talks of an unsolicited non-binding indicative bid with a consortium proposing to acquire its controlling stake, as the offer was “not in the best interest of shareholders”.

This came after the group received an unsolicited non-binding indicative letter from the consortium which is led by its former CEO, Sipho Maseko, Afrifund Investments, comprising Axian Telecom, and the Government Employees Pension Fund (GEPF), managed by the Public Investment Corporation (PIC).

"The Telkom board of directors, having considered the indicative proposal, decided not to continue discussions with the consortium as the board was of the view that the indicative proposal was not in the best interest of shareholders and that the current Telkom strategy would yield better value for shareholders.

“Accordingly, caution is no longer required to be exercised by shareholders when dealing in their securities,” Telkom said.

Telkom has become the takeover target of different companies because of its extensive infrastructure.

Earlier this year MTN abandoned talks of a proposed takeover bid after the mobile operator entertained a rival offer from wireless broadband company Rain.

Last month, Telkom CEO Serame Taukobong said that the mobile operator did not need a rescuer to save it as the business had the right levels of liquidity and that the journey Telkom had been undertaking would deliver the true results.

“We do not need a knight in shining armour, be it my former employee or my former employer,” Taukobong said at the company’s results presentation.

At the time, when he was asked about Telkom’s seeming reluctance to accept offers, Taukobong said: “Let me be cultural and philosophic. It’s like a process of lobola. When you go to a lobola, you send people upfront with a letter to show intent.

“You also leave something with the family to show that you can take care of their daughter. So until somebody comes to our chair with a strong letter and also proof that they can deliver on their proposition, then all approaches will not be considered.”

In its latest results, the mobile operator reported a decrease in profits for its annual results for the year ended March 31, 2023.

It said that the year was characterised by unprecedented levels of load shedding, constrained consumer spending, and dynamic competition against the backdrop of a sluggish economy with persistent inflationary pressures.

The group flagged that headline earnings per share (Heps) dropped by 76.6% to 134.6 cents, compared to 575.3c per share for the prior year.

“As we continued to manage the transition to next-generation technologies, group performance was under pressure from a pronounced reduction in legacy revenues for the year,” it said.

Despite this, Telkom said revenue grew marginally by 0.9% to R43 billion. However, the incremental costs of load shedding reduced overall profitability, notwithstanding its efforts to manage operating costs.

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