Communications minister Dina Pule yesterday met with Telkom's newly-constituted board in a bid to listen to its plans and strengthen government's ties with the operator.
Government is Telkom's single largest shareholder, with almost 40%, and the Public Investment Corporation (PIC) has about 10%. At the end of March, institutional and retail investors - including the PIC - held 58% of Telkom's stock. The company has almost 2% of its own shares in treasury, and 79% of shares are held by South African entities.
"Today's engagement went very well. I'm confident that the board of Telkom will help the state achieve its developmental goals, while ensuring that Telkom remains commercially sustainable," says Pule.
Pule's meeting with the board was also a bid to update it about government's strategic plans. The state, which this year binned a proposed R3.3 billion deal by KT Corporation to buy 20% of Telkom, sees the operator as strategic in its aim to rollout universal broadband by 2020.
Pule and a high-level inter-ministerial task team have been deliberating strategies to turn the operator around. However, these have yet to be made public, causing investors to shy away from the stock, which has taken a beating during the year.
Telkom's share closed yesterday at R15.95, a 5c drop on the day. Earlier this month, it hit an all-time post-Vodacom low of R15.65. The group recently reported its half-year results and said turnover was flat, although it reported a R222 million profit, slightly lower than last year's R233 million, but an improvement on the R179 million gain it made from continuing operations at year-end.
Its total installed base declined year-on-year by 4.4%, to 3.89 million, and Telkom again noted that traditional voice revenues were under pressure. Data, which gained 3% in revenue and 5.8% in subscribers, failed to offset the slowdown in voice.
Pule's meeting with Telkom forms part of the regular series of meetings that she holds with the various stakeholders of the department.
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