Telkom SA

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Telkom was the national incumbent telecommunications provider in South Africa. The state-owned company provided basic local and long distance services on exclusive basis. The company had 4.2 million lines in services by March 1997 when the company was partially divested through the government sale of a 30% controlling stake for US$1.26 billion (R$5.58 billion) to Thintana Communications Group, a consortium formed by SBC International of the US (previously known as Southwestern Bell International) with 60% and Telekom Malaysia with 40%. After this transaction, SBC owned 18% of Telkom, while Telekom Malaysia held 10%. Of the total bid, US$1 billion was injected back into Telkom to help fund its infrastructure expansion program, while the balance went to the state to cut government debt. As part of the sale to Thintana Communications, the then Minister of Posts, Telecommunications and Broadcasting of the Republic of South Africa entered into an agreement with Thintana Communications under which the company undertook significant operational and managerial responsibilities and acquired the ability to exercise effective operational and managerial control over Telkom until May 2002. Since May 2002, Telkom's strategic equity investors no longer exercised effective operational and managerial control over the company, but continued to provide strategic direction as their nominees continued to occupy key managerial positions, including those of Chief Operating Officer, Chief Strategic Officer and Financial Controller, two of whom were Board members, and participated in Telkom's executive committee. Telekom was granted a five-year exclusive period to operate domestic and international basic phone services, public valued added network, and payphone services. In exchange for such exclusive period, Telkom SA committed to fulfill the expansion and quality goals defined in the concession contract. Telkom would have to install 2.8 million new lines, replace 1.25 million analog lines with digital ones, and add 120,000 pay-phones. The exclusive period was extended for a sixth year because Telekom achieved 90% of the set targets by the end of the fourth year of its license. In 2000, the company received a US$48 million loan from the EIB to partly finance the extension of its optical fibre national transmission network. Telkom SA’s monopoly over fixed-line services officially ended in May 2002, but delays in licensing a competitor meant that Telkom remained the exclusive player until December 2005, when the South African authorities awarded a fixed-line license to the Second National Operator (SNO). The SNO was to use the networks of Transtel (the telecoms unit of the country’s main transport conglomerate, Transnet) and Esi-Tel (the telecoms unit of the power utility, Eskom) to compete with Telkom. The government held an IPO on the New York Stock Exchange on March 4, 2003 for a further 25% stake, raising US$488 million, well below the US$1.25 billion predicted a year earlier. After the IPO the government of South Africa owned 39% of Telkom. Regulatory delay and union opposition were cited as key factors in a three-year postponement of the Telkom divestiture. Ucingo Investments (South Africa), black economic empowerment group, completed the acquisition of a 3% stake in the company for R565million (US$68.4 million) in April 2001. Due to funding constraints, Ucingo disposed of its entire shareholding on September 17, 2003. In June 2004, Thintana Communications announced that it sold a 14.9% interest in Telkom to various institutional investors. In November of 2004, the state pension funds administrator Public Investment Commissioners (PIC) acquired Thintana Communications' remaining 15.1% stake for R6.6 billion. PIC was to hold onto the shares and sell them to the Elephant Consortium, a black empowerment group, while they hammered out a financing deal. As of 2005, the shareholding of Telkom was 38% directly owned by the government, 16.1% by state-owned PIC, 6.9% by the Elephant Consortium, and remaining 39% was held either by the public or by small institutional investors. As of end 2005, Telkom SA had 4.708 million fixed-access lines providing local access, domestic and international long-distance, and data network services. The company also operated Vodacom, its 50%-owned subsidiary that is Africa's leading wireless services provider with 17.5 million subscribers (UK-based Vodafone Group owned 35%). As of March 2008, the shareholder breakdown was as follow: - Government of South Africa: 39.4% - Black Ginger 33 (Pty) Limited, a wholly owned subsidiary of the Public Investment Corporation (PIC): 8.9% - The Public Investment Corporation (PIC): 6.4% - The Elephant Consortium, a Black Economic Empowerment group: 5.8% - Telkom Treasury Stock: 4.1% - Free float: 35.4% In October 2010, Telkom launched its mobile network in which the company invested US$862 million in infrastructure roll out. Capex 2013: Wireless Intelligence 1997 33% 260 1000 1998 33% 0 317 1999 33% 0 1686 2000 33% 0 1307 5493 Number of connections (thousands) 2001 33% 68.4 1238 4962 Number of connections (thousands) 2002 33% 0 884 4924 Number of connections (thousands) 2003 61% 488 733 4844 Number of connections (thousands) 2004 43% 0 858 4821 Number of connections (thousands) 2005 46% 0 1026 4708 Number of connections (thousands) https://secure1.telkom.co.za/ir/financial/three_year_financial_review.jsp