PIC makes 2 bln rand total profit on Telkom stake

[Sneeky]

The state-owned asset manager agreed to hold for six months a 15.1 percent stake in fixed-line phone carrier Telkom for a black economic empowerment (BEE) consortium after concerns were raised about the consortium's ability to finance the deal.

"We felt that we could take control of the stake and then make the transaction look much better and in the process make a return," he said. "And we did, we turned around and we made a profit of 1.5 billion in six months."

Profit on the transaction, including special dividends declared by Telkom, had since risen to about 2 billion rand.

http://za.today.reuters.com/news/ne...IDST_0_OZABS-TELECOMS-TELKOM-PIC-20050909.XML

 

[justinct]

 

[stoke]

Poor buggers. Shame man. There's got to be a quicker way to make them the richest people in the world, this route is just taking too long.

 

[mbs]

The basis for the PIC's return notwithstanding, the outcome reflects a favourable investment return for the future pensions of government employees, the majority of whom will not have a living pension when they retire. So taken at face value, this is actually a good thing...

 

[Gooku]

Well ,at least the profit now stays wthin South Africa.

 

[Hi Speed Steve]

AAAAh SH*T

I'm just going to drink my depression away while I struggle to pay my ADSL account. /goes to get whisky/

B***t**ds, make hay while the sun shines, this BEE thing is getting 2 old now. FFS 10 years down the line, they own everything AND they still want more!

OK, rant over, I think I'll take the job at Allied Aerospace in Canada, rather cold than poor

 

[RVFmal]

The basis for the PIC's return notwithstanding, the outcome reflects a favourable investment return for the future pensions of government employees, the majority of whom will not have a living pension when they retire. So taken at face value, this is actually a good thing...

I agree with your sentiments, but given the track record of investments being paid out in this country to the benefit of those on the ground I am sure that a lot of that profit will be diverted to other coffers and accounts.

Oilgate springs to mind as does Mvelaphanda dividends to the Mkhonto members.

 

[mbs]

I agree with your sentiments, but given the track record of investments being paid out in this country to the benefit of those on the ground I am sure that a lot of that profit will be diverted to other coffers and accounts.

Oilgate springs to mind as does Mvelaphanda dividends to the Mkhonto members.

What exactly has Oilgate and Mvelaphanda got to do with the PIC? Those are shenanigans tied to the coffers of the ANC, and has nothing to do with government employees. Despite the barren minds of some forumites who spout forth puerile drivel designed to smear everything 'government' as being the ANC, that is simply not true. The PIC looks after the pension investments of the hundreds of thousands of civil servants we have. Their political leanings are, as with any and all other private citizens, their own concern. Don't make the mistake of assuming that because the PIC is a government agency, that their returns will end up in the coffers of the ANC - there are oversight bodies and very strict governance measures designed to preclude this, not to mention those who subscribe to a real investigative journalism ethic.

 

[Darth Garth]

Craig should be very happy

 

[mbs]

... as should every government employee, although the individual impact may be minimal. In addition, so should every citizen, as the indirect spin-off contributes positively to service delivery - though realisation is very much dependent on the competency of those tasked with actual delivery. In that regard I don't have much confidence in the abilities of most of the current incumbents, witness the unhappiness of those in a number of places throughout the country...

 

[Debbie]

lol @ mbs - getting frustrated?

mbs is right, this is a good thing. And not a surprise- it's not like we haven't watched Telkoms shareprice continue to rise over the past year.

 

[Sneeky]

lol @ mbs - getting frustrated?
mbs is right, this is a good thing. And not a surprise- it's not like we haven't watched Telkoms shareprice continue to rise over the past year.

Seeing as though everyone is offering opinions on this news item, I disagree actualy. Surely it is not a good thing having pension funds propped up by investments that are not sustainable. Is Telkoms share price and profit margin not horribly inflated due to current regulations and their free reign in SA?
Investing in businesses that thrive and offer good returns based on sound business principals and competition seems safer (in the longer term as with pensions) than ones that are at an advantage due to regulation and their ending monopoly surely, or is it rather make hay while the sun shines and get out when you can?
I am asking a question, not wanting to start and argument.

 

[mbs]

lol @ mbs - getting frustrated?

You have no idea - the lines on my face are growing deeper by the day, the grey at the temples is moving inexorably outwards, the hairline is giving up the good fight and retreating to the rear... *sigh* ... and in the words of the immortal stoke - *bleugh*

 

[mbs]

I am asking a question, not wanting to start and argument.

And it's a good question, too. As most financial advisors will tell you, the mark of a good investment is to balance out risk versus assured return - too much on either side, invariably causes loss. I agree with you one thousand percent regarding circumspect investments when it comes to pension funds, though - anybody remember the Masterbond saga?

Be all that as it may, the PIC's investment portfolio has historically been far too 'safe', with the consequence that returns have not been as high as they potentially could've been, had a more aggressive investment policy been followed. Sure, hindsight is always 20/20 vision, as the saying goes. Methinx the current approach is a wise one - apportion the investment pool across a portfolio with a little more risk, particularly given ZA's current investment rating, and try to gain a higher return for the ultimate benefit of the stakeholders, even if only in the short term...

 

[Debbie]

Surely it is not a good thing having pension funds propped up by investments that are not sustainable. Is Telkoms share price and profit margin not horribly inflated due to current regulations and their free reign in SA?

Investing in businesses that thrive and offer good returns based on sound business principals and competition seems safer (in the longer term as with pensions) than ones that are at an advantage due to regulation and their ending monopoly surely, or is it rather make hay while the sun shines and get out when you can?
I am asking a question, not wanting to start and argument.

Sneeky most of what the PIC bought was bought with the plan to sell it within a few months. They always went in as short-term investors. I am not sure how much the PIC has in Telkom at the moment, but I think it's less than a third of what they owned in November last year.

 

[Kropotkin]

Sneeky most of what the PIC bought was bought with the plan to sell it within a few months. They always went in as short-term investors. I am not sure how much the PIC has in Telkom at the moment, but I think it's less than a third of what they owned in November last year.

Also, the PIC had assets of about R377 milliard in March 2005. While they had a significant stake in Telkom, their portfolio of equities is quite well diversified amongst other asset classes (industrials, financials & resources). When asset managers have the opportunity to work with that kind of money they could be inclined to take short term tactical risks, hoping for above normal returns.

 

[Haggle]

Sneeky most of what the PIC bought was bought with the plan to sell it within a few months. They always went in as short-term investors. I am not sure how much the PIC has in Telkom at the moment, but I think it's less than a third of what they owned in November last year.

The PIC bought the Thintana group’s 15,1% stake in Telkom in November last year for about R6bn. The idea was to warehouse 10.1% for BEE companies and only retain 5%. They sold 6,7% to the Elephant consortium and the Wiphold group at R92,50 a share. In the process the PIC made a nice R1,5bn profit.

The Elephant Consortium is led by Dimension Data’s chairman, Andile Ngcaba who is the former communications director-general. It was he who was responsible for creating the many rules and regulations that has hampered our telecommunication industry during the past few years. He is also partly to blame for the delay in launching the SNO. This has cost the country many billions and has helped Telkom entrench its position in the market and reduce its mountain of depth.

The problem is we are sitting with a very influential group of people who have a vested interest in retaining the status quo. The consortiums have borrowed R3.6 billion from the banks to buy their 6.7% stake from the PIC. In order to repay this money they need to ensure that Telkom remains highly profitable. They need those dividends and capital appreciation from a rising share price. According to Moneyweb the deal is structured in such a way that the Telkom share price must reach R165 per share in the next 5 years which will then enable them to hold 3,9% of their stake and repay the loans to the banks.

The million $ question is – Are these peoples total idiots or do they know something that most of us don’t ???

 

[Sneeky]

Thx for that.
I can see now how you would need to split your risk in an investment portfolio then to improve returns.
Perhaps its just me seeing anyone making fortune over a very short term ultimately at my expense rubs me up the wrong way a bit, hehe

Thx Haggle, thats very informative