JOHANNESBURG (Reuters) -The South African government is close to announcing a deal with partly state-owned telecoms firm Telkom, communications minister Mondli Gungubele said on Tuesday, quashing speculation the government might sell its 40% stake in the company.
The country’s third biggest telecoms player has seen its market value halve from the highs seen in 2021 as it struggled to gain market share in mobile and fibre connectivity dominated by behemoths Vodacom and MTN.
As its valuations slumped, its assets – primarily 18 million mobile and 11 million broadband subscribers – became a lucrative acquisition target for rivals, sparking speculation the government might offload its stake.
“We cannot do away with such a leverage,” the minister told a news conference, referring to Telkom’s assets.
“Our country needs speed, at a bigger scale and we need technology to do that. And that technology finds expression in our relationship with Telkom.”
In February, President Cyril Ramaphosa had said he aims to provide affordable, high-speed internet to all, without giving a time frame. Months later, Gungubele said he aimed to connect 80% of South Africans with the internet by 2024.
More than a quarter of the population do not have an internet connection.
“We will be making a pronouncement on the relationship we will have with Telkom in as far as connecting the country is concerned,” Gungubele said, adding the government and Telkom have agreed how the partnership will work.
He did not give a date of the announcement but indicated it could happen in weeks.
The government is happy with the shares it has in Telkom and plans to leverage the relationship to increase internet connectivity in the country, he said, when asked if government would sell its stake.
For the year ended March 31, Telkom impaired 13 billion rand ($739.19 million) of assets and its profit dropped by 77%.
($1 = 17.5867 rand)
(Reporting by Promit Mukherjee, Nellie Peyton and Anait Miridzhanian; Editing by Susan Fenton)
