Telkom plummets on update

By Kimberly Guest for Telkom
Johannesburg, 31 Mar 2008

Telkom's share price lost almost 6% in this morning's trade, following an announcement to shareholders on the Stock Exchange News Service.

The company is currently speaking to analysts and shareholders, providing insight into its strategy going forward. CEO Reuben September has said this transformation strategy will be "nothing short of an emphatic change" for the JSE- and NYSE-listed group.

This morning, the company disclosed several "recent developments" surrounding the group's future direction.

It announced it would not consider the disposal of Telkom, any of its subsidiaries, joint ventures, or any parts thereof unless a "compelling strategic rationale" was in place. It noted it had declined Oger Telecom's expression of interest following a board evaluation, as the offer was not in the interests of Telkom shareholders.

Referring to 50%-owned subsidiary Vodacom, the company said it was supportive of its proposed broad-based black economic transaction. It added it was not in a position to comment on the impact of that transaction on Telkom as details regarding the deal had not been finalised.

The company also revealed it intended to invest in the development of a fixed-wireless and mobile data network. Telkom said it will communicate the timing, extent and implication of this roll-out in due course.

Additionally, Telkom noted it had reached a decision to "substantially reduce" its investment in Telkom Media. This was in line with its recent "clarification and refinement" of its strategy. The company is investigating "all opportunities" to reduce this shareholding in the best interests of Telkom and other shareholders.

At 11am, Telkom was trading at R137.50 a share, down 5.8% or R8.50 on Friday's R146 close.

ITWeb will provide updates on the details of today's analysts briefing as they emerge.