Wall Street will be a memory

By Candice Jones for Telkom

Johannesburg, 11 Aug 2009

Telkom's delisting from the New York Stock Exchange (NYSE) should be finalised by early September.

SA's fixed-line giant says the first notice to the US Securities and Exchange Commission will be filed by 17 August, and a copy of the notice will be given to the NYSE near the end of the month.

The effective delisting date will follow 10 days later. According to the company's executive for investor relations, Nicola White, the process to delist from the US exchange is a simple matter and Telkom is pleased to leave it behind.

She adds that less than 2% of the company's investors own shares in the US, which has been a burden on Telkom's African expansion plans. “Having the NYSE listing has made it difficult for us to acquire anything in Africa. They are sceptical about the market and you have to jump through five million hoops to get anywhere.”

Telkom has spent between R40 million and R50 million a year on maintaining its US listing. White adds that the time it takes to put together the reports has also been a drain on Telkom's resources.

Chris Gilmour, Absa Investments analyst, explains that the reason Telkom listed in the US was to facilitate its international investors - Malaysia Telecom and South Western Bell - in trading shares.

The company opened an American Depository Receipt (ADR), which Gilmour explains is an instrument that allows US citizens to trade shares in foreign companies, such as Telkom and SABMiller. He adds that Telkom will maintain its ADR at level one, which is pure over-the-counter trade, with little in the way of regulatory requirements.

White says the international investors have sold out of the original ADR, making the option less attractive for Telkom to maintain. “Most of our international investors now own ordinary shares in the Johannesburg Securities Exchange.”

With the delisting, Telkom is no longer required to file its US 20F report, which White says is a cumbersome legal document.

The filings will deregister and terminate Telkom's reporting obligations under the Exchange Act for its ADR programme and ordinary shares.

Telkom first announced its decision to delist in June, as part of the company's drive to dramatically cut costs across the organisation. Analysts have praised the move, saying Telkom's time spent on the onerous reporting has been as costly as the financial impact.

It listed in the US in March 2003 at the same time it took to the JSE.