One million register for Telkom shares

By Phillip de Wet for Telkom
Johannesburg, 22 Jan 2003

With registration of interest in acquiring Telkom shares closing tomorrow, the government has declared the process a success, with over one million South Africans already listed.

Public enterprises minister Jeff Radebe described the response as "phenomenal", saying the figure is four times what his department expected.

The majority of those already registered are from Gauteng but all nine provinces are represented and the government says significant numbers of registrations were seen in rural regions.

The company prospectus is expected to be available by tomorrow and will be distributed to all who registered within weeks. Information such as the portion of the company to be offered for sale is not yet available but the government has promised to release it shortly.

This and the recent agreement with trade union Solidarity that it will not pursue legal action to delay the initial public offering leaves the way open to a listing on the Johannesburg and New York stock exchanges in the last two weeks of February.

The government is hoping to raise R6 billion through listing a percentage of Telkom, although it refuses to be drawn on the valuation it expects.

The Department of Public Enterprises is confident the majority of registered citizens will subscribe to either the general share offer or the specially discounted Khulisa offer, although registration creates no obligation to subscribe. However, analysts remain concerned about the likely level of interest from institutional investors, especially in New York, as the appetite for telecommunications shares from developing countries remains slight.

Uncertain prospects

Despite good interim results, Telkom`s prospects remain uncertain as it is unlikely that the nature of its future competitor will be determined before the listing. Only the three players that will make up 49% of the second national operator (SNO), due to be licensed and start competing with Telkom this year, have been identified. With the majority partner undetermined, it is impossible to guess at the strategy the new company will follow.

The Independent Communications Authority of SA hopes to make a recommendation regarding the 51% ownership before the end of January. However, at this stage there are indications that it will find both Goldleaf and Optis, the two contenders, unsuitable. Although this would effectively extend the profitable Telkom monopoly, it would also add to the unpredictability and open the door to more advantageous licence conditions for the SNO.

Other outstanding regulatory issues include the exact leeway granted to Telkom`s fellow state enterprise Sentech in licences recently granted to it and the planned telecommunications licences due to be issued in underserviced rural areas.