South African investment firm Toto Consortium has offered to purchase the government’s 40.5% ownership in Telkom, the country’s third largest mobile network provider. The bid is for $433 million, equivalent to R7 billion.
According to the offer letter dated July 24 obtained by Bloomberg and reviewed by them, The valuation of Telkom by the investing business is derived from the 30-day moving average of the company’s share price, which is then reduced by a 20 percent black empowerment discount.
“The offer is contingent upon the satisfactory conclusion of a due diligence of Telkom,” the company noted in the letter signed by chairman Bongani Gigaba, and “we [Toto] are not averse to partnering with other parties.”
Toto also said that it could get the money it needed for the deal and looked at its investment in Telkom as a long-term one, with no plans toThe sell or otherwise get out of the investment.
In a written response to Bloomberg, South Africa communications minister Khumbudzo Ntshavheni said the following about the offer: said the following about the offer: stated there were currently no intentions for the government to sell its investment in Telkom and that should there be any shift in this position, the government would make that known.
Toto Consortium is the most recent group to show interest in Telkom since the company revealed in July that it was in discussions with MTN, the second-largest mobile network operator in South Africa, over the possibility of being acquired by MTN.
Rain, a South African mobile data-only network, said that it had officially asked Telkom to merge with it. Since then, the country’s mergers regulator, the Takeover Regulation Panel, told Rain to take back its announcement because it was against the law.
With the Telkom offer, Toto will be making its second attempt to buy a piece of a state-owned company. After making an offer to buy the government’s 51% share of South African Airways, Toto was not chosen because Takano Consortium was preferred. Takano Consortium was successful in acquiring the ownership stake for $3. (yes, 3 dollars)