Solidarity wants to block Telkom US listing

By Phillip de Wet for Telkom
Johannesburg, 08 Jan 2003

The Solidarity trade union, one of several within Telkom, has asked the American government to block the company`s New York listing.

Solidarity says the government`s plan to give preferential discounts to previously disadvantaged individuals before the listing is racist and contravenes American law.

The union yesterday presented its "request" in a memorandum handed to staff at the American embassy in Pretoria. It says a similar memorandum was sent to the New York Stock Exchange (NYSE), where the government plans to list Telkom before the end of February.

In a statement, the union says it requested the American government and NYSE to "urge the South African government to abandon its racial requirements with the offer of Telkom shares, and, should the South African government fail to do so, to prohibit the listing of Telkom on the NYSE".

Solidarity also plans to ask the Pretoria High Court to block the local listing on the basis of racial discrimination.

The government, the largest shareholder in Telkom, is currently accepting registration of interest in both a general share offer and a share scheme named Khulisa.

Khulisa is to offer share discounts in excess of that granted to the general public, although the value of the discount is not yet known. The scheme was at first set to be open only to previously disadvantaged individuals, but the government, apparently in response to Solidarity`s threats to delay the listing, scrapped that requirement. Instead, it said, anyone could register for Khulisa but preference would be given to the previously disadvantaged in the case of over-subscription.

However, this is not enough for Solidarity.

"It is just playing with words," says spokesman Kallie Kriel. "In essence nothing has changed."

The union says its fight is broader than the Telkom listing, encompassing every form of transformation where race is at issue.

"It is an important principle where the government chooses to use race as a criterion even when there are other guidelines that can be used," Kriel says.

In Telkom`s case, Solidarity wants income to be the measure by which Khulisa preference is given. This will still give preference to the low-income and impoverished black community, it argues, as such previously disadvantaged individuals make up the majority of those economic sectors.

Solidarity hopes to gain some broad-based support for its cause from the American population and is trying to bring the issue to the attention of the US media. It also plans to continue with a High Court action to block the local listing on the basis of discrimination. Kriel says the government has committed to providing details of Khulisa at the end of January, when the Telkom prospectus is complete, and that the action will be launched soon after the financial information is received.

The Telkom listing is expected to be among the largest ever seen on the JSE and represents nearly all the revenue the government expects from privatisation this fiscal year.

The Department of Public Enterprise, which holds responsibility for the listing, could not immediately be reached for comment.