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SA ‘won’t sell Telkom stake to help Eskom’

File photo: Leon Nicholas

File photo: Leon Nicholas

Published Mar 3, 2015

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Johannesburg - South Africa won’t sell its stake in Telkom SA SOC Ltd as part of a plan to raise funds for electricity needed to spur economic growth, Telecommunications Minister Siyabonga Cwele said.

South African Finance Minister Nhlanhla Nene said in September the government would sell assets to give utility Eskom Holdings SOC Ltd R20 billion in support and increase bond guarantees. The electricity provider faces a R225-billion funding shortfall until March 2018 as it builds plants to meet demand and end rolling blackouts.

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While Nene didn’t specify which assets would be sold, Telkom has been discussed by analysts including Owen Nkomo, head of Inkunzi Investments, as a potential target.

“We’re not selecting Telkom because we want it to give internet; we want connectivity,” Cwele said in an interview at the Mobile World Congress in Barcelona on Monday. “It is strategic. We’re not going to sell Telkom.”

The government owns almost 40 percent of Telkom, which is valued at about R17.6 billion. Africa’s largest fixed-line operator will lead the expansion of broadband internet access to every household by the end of this decade, according to South Africa’s National Infrastructure Plan.

Eskom intends to invest 138 billion rand in the three years through March 2018, according to the National Treasury. The government will give the utility R20 billion this year and another R3 billion in 2016, to be funded through selling state assets.

South Africa favours a sale of its 13.9 percent stake in wireless operator Vodacom Group Ltd, people familiar with the matter said last month. While the stake is valuable to the country, it’s not a long-term investment, according to Cwele.

“I wouldn’t say that long term we’ll need it in the future but it is a useful investment to us,” he said in the interview. “It brings a lot of revenue into government. But it’s not so key in terms of delivering the services to people.”

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Bloomberg

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