S Africa to sign deal with state-owned Telkom for internet access

South Africa’s Communications Minister Mondli Gungubele stated on Tuesday that the government is on the verge of disclosing a deal with partially state-owned telecoms firm Telkom (TKGJ.J).

His remarks put an end to speculations suggesting that the government might sell its 40% stake in the company.

As it faced challenges in gaining market share in the mobile and fibre connectivity sectors, which are dominated by industry giants Vodacom (VODJ.J) and MTN (MTNJ.J), the market value of South Africa’s third-largest telecoms player has significantly declined, halving from its peak in 2021.

As the company’s valuations declined, its substantial assets, notably 18 million mobile and 11 million broadband subscribers, became an attractive acquisition prospect for competitors. This led to speculations that the government might divest its stake in the telecoms firm.

“We cannot do away with such a leverage,” the minister told a news conference, referring to Telkom’s assets.

“Our country needs speed, at a bigger scale and we need technology to do that. And that technology finds expression in our relationship with Telkom.”

Back in February, President Cyril Ramaphosa had expressed his goal of ensuring affordable, high-speed internet access for all, though he did not provide a specific timeline.

In subsequent months, Communications Minister Mondli Gungubele set a target of connecting 80% of South Africans to the internet by 2024.

“We will be making a pronouncement on the relationship we will have with Telkom in as far as connecting the country is concerned,” Gungubele said, adding the government and Telkom have agreed how the partnership will work.

Although he did not provide a specific date for the announcement, Gungubele suggested that it could take place within the coming weeks.

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