Government reduces Telkom price in bid to boost interest

The South African government has reduced the price of the shares it is selling in national PTO Telkom South Africa tomorrow in a bid to counteract the dampening effects on investor sentiment of the unrest in the Middle East. Last week the state was advised by JP Morgan and Deutsche Bank to sell the 25% tranche earmarked for privatisation at between ZAR33 and ZAR40 (USD4 and USD5) per share, a figure which valued the operator at around ZAR23 billion (USD2.8 billion). However, mindful of the way that the investment community has shunned a series of initial public offerings (IPOs) elsewhere around the globe recently due to the general slump in equity markets and concerns about the impact of war in the Middle East, the South African government has cut its share price range to between ZAR27 and ZAR30. It believes the reduction will ensure sufficient demand from foreign and local investors for the sale to go ahead tomorrow and has said that if the placement is a success it may look to offload more of its holding later in the year. Telkom is currently owned by the government (67%), Thintana Communications (30%) and Ucingo Investments (3%); Thintana Communications is a 60/40 joint venture between SBC Communications of the US and Telekom Malaysia, which bought their stakes when Telkom was partially privatised in 1997.