South Africa’s third-largest mobile network, Telkom, has rejected a bid for a controlling stake in the company by a consortium led by its former group CEO Sipho Maseko, and that has gradually caused its share price to plummet by 7% on Friday and another 6% on Monday soon after the announcement was made.
On 12 June 2023, Telkom said it received an unsolicited, non-binding indicative letter from the Maseko consortium to buy a controlling stake in the company which was reported to be an offer of R46 a share. The consortium consisted of Maseko’s Afrifund, Axian Telecom, and the Government Employees Pension Fund, managed by the Public Investment Corporation.
In a statement, Telkom said:
Shareholders are referred to the Telkom announcement published on SENS on Monday, 12 June 2023 relating to an unsolicited non-binding indicative letter from a consortium consisting of Afrifund Investments, Axian Telecom and the Government Employees Pension Fund, managed by the Public Investment Corporation for the acquisition of a controlling stake in Telkom.
The Telkom board of directors having considered the indicative proposal, has decided not to continue discussions with the consortium, as the board is of the view that the indicative proposal is not in the best interest of shareholders and that the current Telkom strategy will yield better value for shareholders.
Accordingly, caution is no longer required to be exercised by shareholders when dealing in their securities.
Sipho Maseko resigned as Telkom group CEO in December 2021 after eight years at the helm. He has since been replaced by Serame Taukobong who more recently went on record to say that the company is worth over R60 per share, and any suitors should see that as a benchmark before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 Maseko’s consortium offer, Taukobong said no due diligence was done, and that is where the matter had ended. Last week, the Telkom board said it had decided not to continue discussions with the consortium.
The market was pinning its hopes on corporate action, and the news of terminating discussions sent the share price 6.69% lower on the day. The decline continued on Monday morning, and the share price was down by another 5.7% by the time of writing.
Last year, MTN, Africa’s biggest mobile operator, also made moves to buy Telkom. However, MTN walked away from the deal after the telephony group failed to provide Africa’s largest mobile operator with assurances about exclusivity.
In January, Telkom and Rain terminated discussions relating to Rain’s proposal to merge with the majority state-owned telephony group
