Its official, local telecommunication group Telkom is set to surrender an equivalent of up to 20% of its issued shares to KT Corporation a Korean telecoms giant.
Telkom announced yesterday that it has reached an agreement with KT which will come in as a strategic equity partner. The deal which is still subject to a number of conditions was struck at R25.60 which is significantly lower than the initial suggested price but still represented a 7.1% premium to the volume weighted average price for the 30 trading days up to and including 4 May 2012.
The reduced price tag is reflective of Telkom’s continued financial misfortunes.
The statement said “In the event that Telkom declares and/or pays any distribution to Telkom shareholders prior to the implementation of the Proposed Strategic Venture, the aggregate subscription price payable by KT will be reduced by 20% of the total gross distribution declared and/or paid by Telkom.
It said the Companies were entering into a 5-year co-source management services agreement to formalise the relationship and identified areas of mutual strategic and business cooperation.
The transaction remains subject to the fulfilment of a number of conditions. These include final resolution of the current investigation of Telkom by the Competition to the satisfaction of KT, receipt of in principle support from South African government support by Allan Gray and the Public Investment Corporation.