If it is true that the African National Congress (ANC) is really considering regaining full control of Telkom , which means taking the once dominant South African telecommunications firm off the JSE, then the Treasury’s coffers are much fuller than we have been led to believe.
And maybe the argument for e-tolls just got a whole lot weaker.
If they can afford the premium that minority shareholders are likely to seek for the ailing company, then why am I still expected to contribute to the Gauteng Freeway Improvement Project?
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At the close of trade yesterday, Telkom was valued at more than R10-billion. An offer to minorities would have to come with a generous premium. Even the state-controlled Public Investment Corporation (which looks after the pensions of state workers) would want a nice payoff, if there indeed is a plan lurking in Luthuli House.
Apart from the costs of taking it off the exchange, rough estimates are it will need about three times its market cap over the next three years to get it back on track.
Telkom’s stock rocketed close to 8% on news of potential renationalisation plans, but a statement by the Department of Communications, denying that any such plans had been hatched, doused the excitement. The company ended the day only 2,4% firmer. Despite the denial, and the Union Buildings being just about 60km from ANC headquarters in downtown Johannesburg, sometimes the one hand doesn’t know what the other is doing or planning to do.
The reason we are adopting the user pays principle to infrastructure, we’ve been told, is that the purse strings are tightening due to rising welfare and public sector wage costs. Combined, they represent more than 50% of the budget.
Based on those figures alone, there is a rationale behind e-tolling, but that’s not to say I totally agree with it. Just as in Greece, higher public sector wages are not being matched by greater productivity.
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