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KT, Telkom deal collapses


Johannesburg, 01 Jun 2012

Government has pulled the plug on a proposed strategic transaction between Korea-based KT Corporation and Telkom, which would have seen the Korean firm buy a 20% stake in the local operator.

Telkom said in a statement that communications minister Dina Pule has informed it that Cabinet has taken the decision not to support the transaction “as proposed”. The fixed-line operator says it will engage with Pule to discuss Cabinet's decision and its implications.

The operator says the engagement also aims to obtain clarity on the context of the decision as Korea Telecom, and the transaction, were introduced to Telkom by government.

In May, Telkom said, following an “extensive investigation period” into the merits of the proposed venture, the companies reached an in-principle agreement over the terms.

Telkom said it would issue new shares to KT for R25.60, which was a 9.9% premium on 4 May's closing price. The deal was subject to several conditions, including in-principle support from the South African government, which holds a 39% stake, as well as support from Allan Gray and the Public Investment Corporation.

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