Just how badly does Telkom need a cash infusion from the consortium of investors led by former CEO Sipho Maseko? A quick look at the partly state-owned telecom operator reveals it is in a tight spot.
Telkom is scrambling for cash to make up for the skyrocketing cost of doing business in a load-shedding environment in which competition is fierce, sales are sluggish and debt-laden consumers are struggling to pay their phone bills.
In an earnings report for the year ending in March, Telkom plunged to a staggering R10bn loss, setting it back a decade and piling pressure on management to turn things around. One thing it needs urgently is cash. Maseko, alongside his team of investors, has lined up a R12bn war chest to buy a 35% stake in the company and inject money into it.
Telkom’s board may be lukewarm about the offer but Maseko has approached shareholders directly, securing commitments from them to sell 35% of the company to his consortium.
It is not unreasonable to imagine that the board, led by former Industrial Development Corporation CEO Geoffrey Qhena, is annoyed by what he thinks is a cheeky and opportunistic offer. Yet, faced with the alternative of tapping shareholders to pump money into the company via a rights offer, it would be left with little choice.
That is how shareholders who have rallied behind Maseko see it.
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