Africa's No 1 fixed-line phone operator Telkom may sell off cable TV unit
24 March 2009
Telkom Ltd., Africa's largest fixed-line telephone operator, said talks over its Telkom Media television unit were ''ongoing'' after the Business Report newspaper said the division might be shut. Business Report had cited an unnamed source as saying Telkom Media shareholders would probably meet in the next few weeks to discuss the possible winding up of the business.
According to media reports potential suitors included Chinese company Shenzen Media, the state pension administrator Public Investment Corporation and unlisted Mvelaphanda Holdings.
''You can't put a timeline on discussions,'' Pynee Chetty, a spokesman for Pretoria-based Telkom, said today. The rationale for the company's ''move out of Telkom Media'' remains the same as a plan announced at a 31 March 2008, presentation, Nicola White, Telkom's head of investor relations, said.
Telkom CEO Reuben September said on 17 November that the company was close to completing a deal to ''substantially'' cut its stake in the business because it will take too long to make returns. September said on 3 December that Telkom would complete the sale by the end of 2008. Telkom Media was awarded a satellite and pay-TV cable-broadcasting license by South Africa's broadcast regulator in September 2007.
Telkom may shut down the unit after talks to sell its 66 per cent stake in the business failed because Telkom wanted to be compensated for the money it had invested in the division, Business Report said today, citing an unidentified person familiar with the plan. The unit has reduced by half the 379 staff members it employed at the end of March last year, it said.
Telkom had hoped launching a pay-TV service would help it offset falling revenue at its core fixed-line business, but it has failed to get the project off the ground.
The stock gained 1.70 rand, or 1.6 per cent, to 107 rand as of 9:18 a.m. in Johannesburg trading, giving Telkom a market value of 56.7 billion rand ($6 billion).