Govt, Solidarity reach agreement on Telkom listing

Johannesburg, 13 Jan 2003

Trade union Solidarity has backed off from threats to delay Telkom`s listing with legal action after the government agreed that participation in the Khulisa pre-listing offer would not be judged on race.

Solidarity said on Friday it would not continue with a High Court action to block the listing and today withdrew memorandums of protest it presented to the American government and the New York Stock Exchange.

The union had asked the American government to block the proposed secondary Telkom listing in New York, saying the planned racial discrimination of Khulisa contravened American law and policy.

Solidarity spokesman Kallie Kriel says the Department of Public Enterprises has agreed in principle that there will be no discrimination based on race or gender in the pre-listing offer. Instead, the special discounts offered through Khulisa will be available to individuals based on their income level, the metric Solidarity has been lobbying for.

"We accept this agreement and in light of that have no reason to proceed with our legal action," says Kriel.

Government is the majority shareholder in Telkom and intends to create the broadest possible pool of small local shareholders when the company is listed.

Through Khulisa, named after the Xhosa and Zulu term for fostering development, individuals and groups such as stokvels will be able to acquire Telkom shares at a greater discount than the general offer. Plans also include subsidising the cost of share dealings and giving free shares to those who do not sell their shares within the first two years after listing.

In return, shares acquired under Khulisa may not be sold for the first three months after listing.

When Khulisa was first announced, government said it would be open only to historical disadvantaged individuals (HDIs), defined as those unable to vote before 1994 because of their race. After objections from Solidarity and its first threat to take the issue to court, government said the offer would be open to all South Africans but with preference given to HDIs.

Solidarity is now satisfied that race will play no role in the selection of those to benefit from the scheme, but says it will "continue discussions" with the government and may resume legal action if the final scheme does not conform to the agreement.

A Telkom prospectus is in the final stages of being prepared and is expected to be available at the end of this month or in early February. The listing is expected to proceed before the end of February.

According to government, more than 500 000 individuals have already registered interest in acquiring Telkom shares.