Telkom has confirmed its position regarding the possible sale of government shares to fund a bailout of South African Airways.
In a communication released by the telecoms giant, it says that its major shareholder, the SA government, is considering “partially reducing” its 39% shareholding.
The sale is part of government’s plan to issue SAA with a R10-billion bailout package, in an attempt to kickstart some sort of financial revival
“The implementation of government’s Telkom proposal may have a material effect on Telkom’s share price,” it notes. “Accordingly, shareholders are advised to exercise caution when dealing in Telkom’s securities until a further announcement is made in this regard.”
This isn’t great news for other shareholders, but DA MP and Shadow Deputy Minister of Finance Alf Lees also believes that at the end of the day, it may not even be enough to save the disastrous mess that is SAA.
“Finance Minister, Malusi Gigaba, has approved a R10 billion bailout for 2017/18 which does not even take in to account the R23.3 billion in bailouts and guarantees to SAA over the past decade,” he notes with concern. “Therefore, another bailout beyond 2019 is highly likely.”
In another statement, he adds that such a sale of shares would greatly reduce their value, and therefore this alone would not be enough to cover the cost of recapitalising the ailing airline.