No permission given for Telkom share sale

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 09 Oct 2006

The Public Investment Corporation (PIC) has not given permission to sell to holders of the former Tinthana`s 15.1% Telkom stake.

The original shareholding remains unchanged, former PIC asset manager Tshepo Mahloele says.

Mahloele was reacting to a Sunday Times report stating his office gave permission to Clidet 532, part of the Leopard Consortium, which he says did not happen.

"The PIC exited the Telkom share deal after we had made a lot of money, about R2.5 billion, in June and transferred our role as a funder of the structure to Citigroup. However, this transfer was done without prejudicing the rights of the BEE transaction and the original structure of the deal remains the same," he says.

In terms of the original deal that was structured in November 2004, the Tinthana Consortium, made up of US telecommunications group SBC (now AT&T), and Malaysia Telkom, sold its 15.1% to the PIC. Of that 15.1%, 5% went to the Government Employees Pension Fund, 3.4% was warehoused for further BEE transactions and the remained was split equally between the Leopard and Lion consortia.

Lion is headed by former Department of Communications director-general Andile Ngcaba who is now executive chairman of Dimension Data SA. The department is government`s shareholder representative in Telkom.

The deal between the PIC and the consortia included a lock-in clause stipulating none would sell any shares before May 2010 in order to give time to the purchasers to pay off their investments as they had to borrow heavily to fund their transactions.

Women`s investment group Wiphold was the lead in the Leopard Consortium that includes a number of investment firms and shelf companies, including Blue Label Investment and Clidet 532.

Ngcaba says he is unaware of any sale of Telkom shares by any of the consortia involved in the BEE deal of a year ago.

"The shares from my group have not been sold and I have no knowledge of any transaction," he says.

Gloria Serobe, chairperson of Wiphold was not available for comment as she is conducting a road show.

Mahloele says the shareholding structures among the various parties within the consortia could have changed, especially within Leopard.

"We have no means of policing those shareholding structures as that is an internal matter among them," he says.

The role of the head of the presidency in the ruling African National Congress (ANC), Smuts Ngonyama, remains controversial as the Sunday Times alleges he has made money out of the deal. Ngonyama maintains his role was to find an amicable solution to the bids by Leopard and Lion and act as a mediator on the orders of president Thabo Mbeki. He maintains that he was never "rewarded" for his role.

Telkom shares dropped 39c in midday trade today, to R134.60, after about 40 000 shares had changed hands. An equity trader says trade in Telkom shares was very quiet.