The Public Investment Corporation (PIC), which owns almost 11% of Telkom, is concerned about the group's performance.
Telkom's shares started sliding after news that Cabinet would not support a proposed venture between it and Korea-based KT Corporation. KT would have acquired 20% of Telkom for about R3.3 billion.
On 1 June, its stock ended the day 8.34% down - a 191c decline - at R21, a new eight-year low at the time. After it reported its first net loss since listing, in the middle of June, its share closed at R19.11.
After Telkom withdrew a cautionary announcement around the KT deal last month, its share price slid again, this time to a new eight-year low of R17.97. Its stock closed at R18.34 yesterday after gaining 9c, or 0.49%, on the day.
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Dlamini says the PIC has been in contact with Telkom, which has updated it on the current state of affairs, post the turning down of the KT deal by government.
“Telkom has a strategy in place but execution risks dictate that a tie up with a strategic partner would minimise these risks and assure the successful rollout of the turnaround strategy.”
Dlamini notes that its intended partner, KT, is a market leader in the telecoms sector in Korea, and also leads in areas Telkom has identified as key to its strategic plan, such as convergence.
Telkom earlier this year unveiled a strategy that includes leading in data, broadband and fixed-mobile convergence, growing Telkom Business's income through diversification, regaining competitiveness in the consumer market, consolidating its position as a wholesaler of choice, focusing on profitable market segments and services, and enhancing its operational efficiency.
Telkom presented its turnaround strategy to government, including its proposed strategic partnership with KT, Dlamini says. However, government would like Telkom to present more strategic turnaround options, so that the KT proposal can be weighed up against other possible options, he adds.
Telkom and the Department of Communications are set to meet to discuss more options, and communications minister Dina Pule has until about the end of this month to report back to Cabinet on proposed ways forward.
“We believe that Telkom and government are working together to close the process gaps that arose as a result of Telkom not presenting more than one option to government, which would have assisted it in the decision-making process for a higher conviction call by government.” Dlamini says this is a prudent move by government.
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