Johannesburg, 09 Nov 2004
The sale of the Thintana stake in Telkom to a consortium headed by Andile Ngcaba has raised criticism in various quarters, but both Telkom`s CEO and Ngcaba have dismissed concerns of conflict of interests.
Thintana Communications is a joint venture between the US`s SBC Communications, which owns 60% of the venture, and Malaysia`s Telekom Malaysia Berhad, with 40%.
SBC announced last night that Thintana had agreed to sell its remaining 15.1% stake in Telkom to a consortium led by Andile Ngcaba and Women Investment Portfolio Holdings, advised by Smuts Ngonyama.
According to a statement released by the consortium: "The intention of the consortium is to play the role of significant minority partner to government in a key strategic asset and to add value through the skills, knowledge and business contacts of the members of the consortium.
"Given this intended role, while the consortium will enjoy rights of representation on the Telkom board, it does not consider it necessary to continue with the strategic services agreement currently in place between Thintana and Telkom and this agreement will be terminated following closure of the transaction."
The announcement has caused some controversy. Ngcaba, formerly director-general of the Department of Communications, is chairman-designate of Dimension Data SA and Ngonyama is the spokesman for the African National Congress (ANC).
"I was quite surprised when I saw it," says an analyst. "I can imagine there must be some benefits for Dimension Data, but it`s possible there might be a conflict of interests," he says. Another analyst says the deal is good for Telkom, as there has been some uncertainty around the Thintana stake.
Thintana`s shareholding was reduced from 30% in June when it sold half its shareholding in a bookbuilt offering.
Empowerment
The Democratic Alliance (DA) has slammed the latest deal, with Dene Smuts, the party`s spokesman on communications, commenting that it involves people too close to the ruling party.
In Parliament this morning she asked Telkom CEO Sizwe Nxasana to explain the implications of the deal.
He replied that it was difficult for Telkom to comment, but added that the consortium had been given until Monday to address within its own structures any conflict of interest issues. The deadline relates to the conditions precedent to the sale.
The consortium will have the right to have two representatives on Telkom`s board.
There was no conflict of interest related to Ngcaba`s connection with Dimension Data, Nxasana told ITWeb during a break in a presentation to the Portfolio Committee on Communications. "It`s a good thing. I see Telkom and Dimension Data doing a lot of good things together in the future."
An official Telkom statement quotes Nxasana as saying: "This is a positive new development and we welcome the consortium as a new strategic shareholder and look forward to the value they will add to Telkom."
He told the portfolio committee that the deal is a good one because it brings Telkom a step closer to being a properly accredited black economic empowerment (BEE) company in terms of how Telkom understands BEE to be implemented.
Ngcaba says his involvement in the consortium was disclosed to Dimension Data, "and they understand it". He says the approach is being taken that there are opportunities between Telkom and Dimension Data that can be explored.
He also dismissed the political question, saying this was purely a commercial transaction. Ngonyama`s role was simply to bring the two groups together.
Asked whether Ngonyama would continue to play a role, he replied: "We will be discussing that."
He pointed out that the market has reacted positively to the deal, with Telkom`s share price rising by 690c or 8% to R93 by lunchtime.
Dimension Data had not returned calls by the time of publication.
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