Siseko Njobeni
2 June 2008
Johannesburg — THE South African telecoms industry is set to enter a period of dramatic restructuring today after an audacious, fully funded bid by an Mvelaphanda Holdings-led consortium for Telkom, which seems likely to value the company at about R90bn.
The bid comes on top of separate talks between MTN and India's second-biggest cellphone operator, Reliance Communications, which could see the combined group become a major force in emerging market telecommunications.
The Sunday Times reported yesterday that a letter was sent to Telkom by the Mvelaphanda-led consortium on Friday outlining a R90bn bid by Mvela for the "total ownership of Telkom". However, it is understood that the bid would result in the government and the Public Investment Corporation (PIC) retaining their stake in Telkom.
In addition, the black economic empowerment (BEE) transaction Vodacom has just undertaken would remain intact, and Vodacom could be separately listed on the JSE . Vodacom is half-owned by Telkom, with the remaining 50% being held by British cellphone giant Vodafone.
The plan could also result in Vodafone gaining a controlling interest in Vodacom, which it has sought for some time.
Spokesmen for Telkom and Mvelaphanda Holdings declined to comment yesterday, but Telkom is likely to issue a JSE (Sens) statement today.
Mvelaphanda spokesman Chris Vick said yesterday the company would not comment on its supposed bid for Telkom. "It is a speculative article and we do not comment on speculation," Vick said.
Joe Makhafola, spokesman for Communications Minister Ivy Matsepe-Casaburri, said yesterday the communications department was not aware of Mvelaphanda's bid for Telkom.
The government owns 38,9% of Telkom, the PIC owns 15,3%, and the Elephant Consortium, which includes African National Congress heavyweights such as the party's previous spokesman, Smuts Ngonyama, owns 5,7%.
The government has shown that it is not keen to sell its stake in Telkom, which has necessitated a bid for the group being made on the basis that the government will keep control of the company.
The relationship between Telkom and Vodacom has been fraught for some time, and Telkom appears keen to develop its own cellphone offering.
However, it does not appear that Telkom invited the bid, and consequently it seems likely that it will have to spend some time considering its merits.
Other bids could also be made for the company on a different basis.
However, it is understood that the Mvela-led bid is fully funded, and backed by not only Mvela but also by other BEE groupings.
The financial backing from the group comes partly from US and Saudi-based investment funds.
The Sunday Times speculated that these groups included the Och-Ziff group, which has previously been linked to Mvela in different deals, and the Saudi Oger Group, which is invested in the Cell-C operator in SA.
Attempts to get comment from PIC CEO Brian Molefe were unsuccessful.
The PIC acquired its stake in Telkom in November 2004 when it bought Thintana Communications' interest in the company for R6,6bn. The PIC bought the stake with the intention of warehousing it for the Elephant Consortium, a successful bidder for the Thintana interest.
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