Telkom gets shareholder approval for sale of Vodacom stake

March 29, 2009 • Mobile and Telecoms

reuben_septemberUSE.jpgTelkom’s strategic focus on growth in the area of mobile capability received a major boost at the Company’s Special General Meeting when Telkom shareholders gave unanimous approval for the sale of 15 percent of Telkom’s stake in Vodacom to the UK’s Vodafone Group.

The transaction, valued at R22.5 billion, will result in Telkom listing its remaining 35 percent in Vodacom and distributing the shares to Telkom shareholders by way of an unbundling.

Commenting on the positive shareholder response, Telkom CEO, Reuben September, said that “a new era has dawned for the Telkom Group”.

“We have identified a need to improve our competitive ability in the mobile space, but have been prohibited from doing so by the shareholders’ agreement which had placed severe restrictions on us,” said September.

The shareholders’ agreement had prevented Telkom from offering mobile voice services in South Africa and expanding into Africa, south of the equator.

“The rapid pace of change in communications technology meant that the inability to deliver mobile and converged services had blunted Telkom’s competitiveness. Yesterday’s shareholders’ approval means that we are now truly free to compete so that we are able to maintain our leadership position in South Africa while building a strong footprint on the continent,” stated September.

“Going forward, we will act swiftly and decisively to execute our strategies in the areas of mobile services, integrated solutions and the provision of converged fixed-line, mobile and data solutions,” he added.

September emphasised that the Telkom shareholders’ vote also freed the Company from the geographic limitations previously imposed by the shareholders’ agreement.

He explained that no one stands to benefit more than Telkom’s customers. “With its own mobile operations, Telkom will have the ability to provide converged solutions to both residential and corporate customers and to deploy wireless access solutions, even in under-serviced areas. We will also be able to offer fully converged services (fixed, mobile and data) through bundles which will offer significant value to customers as well as leverage our employee and network strength.”

“In essence,” concluded September, “with the proceeds from the sale of our Vodacom stake, Telkom will be able to speed up investments to execute its strategy, not only to create shareholder value but to allow it to become stronger, more competitive and more technologically enhanced within an ICT landscape that’s become increasingly competitive. We will therefore act prudently in our approach to capital investments with our priority remaining the maximisation of our value from existing investments.”

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