All quiet on Mvela-Telkom deal

By Leon Engelbrecht for Telkom
Johannesburg, 08 Jul 2008

It has been just over a month since ANC heavyweight Tokyo Sexwale's Mvelaphanda Holdings (Mvela) made a R90 billion bid for the "total ownership of Telkom".

At present, the only certainty is that Telkom's cautionary statement on the JSE's Stock Exchange News Service (SENS) that talks are in progress stands.

Telkom spokesman Piney Chetty reminds that cautionary notices lapse after six weeks, which should be 14 July in the Telkom-Mvela case. Chetty confirms talks are under way but could not comment further, saying any announcements would first have to be released via SENS.

Mvela is not commenting, but spokesman Chris Vick says it would be wrong to assume talks had collapsed. Mvela has for the last month declined to elaborate on its broader telecommunications strategy, with Vick suggesting it is still under development.

IDC telecoms analyst Richard Hurst says he would have expected Mvela to develop its strategy before making a bid for Telkom, not afterwards.

However, he cautions: "It's too early to speculate. It's too nebulous and behind-closed-doors to say what's happening. If you are not privy to the negotiations, you are not going to know."

World Wide Worx analyst Steven Ambrose also commends the security surrounding the talks. "It has been rather quiet in this regard, which does make one think that something is happening."

Africa Analysis analyst Dobek Pater notes that "normally silence means there is no news to report, therefore little prospect of anything happening". BMI-TechKnowledge's Denis Smit also describes the situation as "very quiet".

The government owns 38.9% of Telkom, the PIC owns 15.3%, and the Elephant Consortium, which includes African National Congress heavyweights such as the party's previous spokesman, Smuts Ngonyama, owns 5.7%.

The Sunday Times last month reported the Mvela bid was fully funded - not only by Mvela "but also by other BEE groupings".

The paper speculated the financial backing came partly from US- and Saudi-based investment funds, including the Och-Ziff group, which has previously been linked to Mvela in different deals, and the Saudi Oger Group, which is invested in Cell C.

The report added the deal would see Vodacom, 50% owned by Telkom, sold off and would likely have government and the PIC keep their shares.