ICT

Telkom confirms bids from Vodafone and Mvela

With talks between MTN and India's Reliance Communciations already underway, a second player in the SA telecom's industry is about to become the subject of takeover proposals.

Telkom (JSE:TKG) is set to become the target of a bidding war, following the confirmation Monday that both Vodafone and Mvelaphanda Holdings (JSE:MVG) have made bids for the whole group, with the ultimate aim of owning Telkom's Vodafone stake.

In a JSE news service announcment (Sens) Telkom informed shareholders that it had recieved non-binding proposals from a wholly-owned subsidiary of Vodafone Group Plc ("Vodafone") to acquire a portion of Telkom's stake in Vodacom Group subject to the company unbundling its remaining stake in Vodacom to Telkom shareholders.

Telkom confirms that it had also received a letter from a consortium comprising Mvelaphanda Holdings, affiliated
funds of Och-Ziff Capital Management Group and other strategic funders.

The letter says that the consortium is considering making an offer for the entire issued share capital of Telkom. The letter makes it clear that the offer will only be made if a number of pre-conditions are met including,inter alia, confirmation by the Telkom Board that it will unbundle Telkom's entire 50% stake in Vodacom as part of the offer.

The discussions with Vodafone commenced on Wednesday, May 14 2008 and are independent from the approach from the consortium, the statement says.

Telkom said that in accordance with its fiduciary duties, it would evaluate all bona fide offers with a view to maximising shareholder value. No transaction would be entered into without requisite shareholder approvals and the company would advise shareholders of further developments "in due course".

Telkom's share price jumped 11% on Monday morning. The Sunday Times business section reported yesterday that the Mvela bid could be valued at R90bn, which would constitute a roughly 23% premium to its closing share price on Friday.

Both bids appear to be unsolicited, and consequently, Tekom is likely to take some time to analyse its proposals.

The bids appear to be similarly structured, and the idea is for government the Public Investment Corporation (PIC) to retain their controlling interest in Telkom. Government currently holds 38% of the company, and the PIC holds 15%. The Elephant Consortium is another large shareholder with 6%.

The Sunday Times said that an alternative bid by another group headed by businessman Barend Hendricks, which aims at buying a smaller portion of Telkom and which is backed by ANC leaders.

The Mvela-led bid could see Vodacom spun out of the group and perhaps a 10% stake sold to Vodafone, with a portion of the company being listed on the JSE.

The Mvela consortium is understood to include BEE participants outside of the Mvela stable.

The Sunday Times said that an alternative bid by another group headed by businessman Barend Hendricks, which aims at buying a smaller portion of Telkom and which is backed by ANC leaders.

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