The South African operator has received an unsolicited bid from a consortium led by former CEO Sipho Maseko
This week, Telkom South Africa has confirmed that it has been approached with a “non-binding indicative letter” from a consortium seeking a majority stake in the business.
The consortium reportedly includes Axian Telecom and the Government Employees Pension Fund, managed by the Public Investment Corporation, and is led by Telkom’s former CEO, Sipho Maseko.
Discussions surrounding the bid are reportedly still in the “exploratory” stage, with the Telkom board of directors considering its options. Telkom has also asked the consortium to provide additional clarity on a number of matters, including the proposed offer price and the certainty of funding.
The bid comes at a troubling time for Telkom, which has this week announced that its full-year earnings have plummeted, falling 76.6% year-on-year. The company blames this collapse on various macroeconomic factors, primarily soaring inflation and the ongoing national energy crisis.
South Africa is currently facing some of its worst-ever power cuts as a result of its overwhelmed national power grid, with some blackouts lasting up to 16 hours. Throughout this crisis, the nation’s telecoms operators have been scrambling to keep their networks operational – at considerable cost – with MTN even crowdsourcing generators to keep their mobile sites up and running.
Telkom itself noted the “unparalleled levels of loadshedding” that the company had faced in the past year, also highlighting the “alarming number of incidents of theft and vandalism targeting network infrastructure”.
However, the company’s struggling financial performance is not the only driver for the takeover offer. In fact, the company has been mulling over mergers and tie-ups with local and international players for over a year now, having seen negotiations take place with both Rain and MTN in the last year.
More recently, however, it has been pan-African operator group Axian that has perhaps displayed the greatest interest, having submitted a joint bid as part of the Afrifund Investments consortium earlier this year. This bid was ultimately rejected for being too low, hence necessitating this new approach this week.
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