JOHANNESBURG: In its most important privatisation, South Africa offered yesterday 139.3 million ordinary shares in state-controlled phone utility Telkom – a quarter of the fixed-line and cellphone group – at between 33.50 and 40.90 rand a share. The long-awaited initial public offering (IPO) is expected to rake in 4.7 billion to 6.8 billion rand.
The price range values Telkom at between 18.4 billion rand and 22.8 billion rand. At their most bullish forecasts, analysts had valued Telkom at 25 billion rand.
That is just a quarter of its value a few years ago, before telecom stocks worldwide hit the skids, with European operators crumbling under a mountain of debt accumulated when they bought licences to 3G services.
The group is already 30% jointly held by SBC of the United States and Telekom Malaysia Bhd.
It has been preparing for its IPO for years, cutting jobs and increasing other efficiencies. But wrangles of state telecoms policy, coupled with the downturn in global telco shares, led to numerous delays.
Financial markets have been keenly awaiting the retail launch of the IPO, which closes on Feb 20.
Details of the issue helped firm the rand yesterday.
The IPO price and share allocation will be announced on Feb 25 – the day before the finance minister unveils his budget for the year ahead. The listing will make up the bulk of the privatisation revenues for the 2002/03 financial year.
The offering is seen as a key indicator of the government's commitment to privatisation and has been one factor holding up an expected upgrade in the country's credit rating. It will also set the tone for more asset sales.
Government officials have said they expect an equal split between local and foreign institutional investors taking up the offer.
Apart from the main offer, the government also made a special offer to small local retail investors. Those individuals who want to buy more than 500 rand worth of shares can do so at a 5% discount.
Black people, who were disadvantaged under apartheid, which ended in 1994, can apply for shares worth up to 5,000 rand at a discount of 20%. This is part of the state's efforts to give majority blacks a bigger stake in the white-dominated economy – Reuters.
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