South African tycoon Sipho Maseko hits roadblock as Telkom rejects latest bid

Telkom, South Africa’s third-largest telecommunications services provider, has firmly rejected a bid led by prominent South African businessman Sipho Maseko to acquire a substantial stake in the struggling telecom company.

In response to the offer, Telkom CEO Serame Taukobong stated that the company did not require saving, dismissing the proposal made by his predecessor.

Last week, Maseko through his firm Afrifund Investments and supported by Africa’s largest asset manager, the Public Investment Corporation (PIC), presented a bold bid to acquire a 35-percent stake in Telkom.

With a substantial pooled fund of approximately R12 billion ($608 million), the investors sought to inject much-needed capital into the company, which has recently experienced a significant decline in share price and a $660-million asset writedown.

However, during Telkom’s results presentation on Tuesday, CEO Serame Taukobong responded to the unsolicited offer, stating: “We do not need a knight in shining armor, be it my former employee or my former employer.”

While he confirmed that the company remains open to updated offers from Maseko and his consortium, Taukobong emphasized that a proposal would only be considered if accompanied by a strong letter of intent and proof of delivery capability.

Telkom’s financial performance for the 2023 fiscal year was disappointing, with profits dropping by nearly 80 percent. The company attributed this decline to the write-down of its cash generation units, which amounted to over R13 billion ($700 million).

Additionally, headline earnings per share plummeted by 76.6 percent, reflecting the challenging market conditions and decreased consumer confidence that impacted Telkom’s performance throughout the year.

Following the recent decline in its share price, Telkom has taken steps to impair its cash-generating units, including Openserve and Telkom Consumer, by R13 billion ($700 million). The telecom company acknowledged the urgency of turning around its financial situation and expressed its commitment to exploring potential opportunities.

Telkom’s rejection of the acquisition offer from Maseko and the consortium underscores the company’s determination to address its challenges independently. As it navigates this challenging period, investors await further developments to see if alternative proposals will emerge or if the company can revitalize itself from within.