Big guns betting on Telkom

Although the South African government owns most of Telkom, nine private investment firms comprise the rest of the company’s shareholders, with 15% based outside the country.

In its latest integrated report for the year ending 31 March 2024, Telkom revealed the composition of its shareholders, their geographic location, and investment style.

The telco was valued at just over R11 billion at the time of publication.

40.5% of this is directly owned by the South African government, 44.6% by institutional shareholders, 9.4% by non-institutional shareholders, and 4.7% in treasury shares.

Of the institutional shareholders, just under 83% are based in South Africa. Outside of South Africa, United States-based entities own the most shares in Telkom at 12.4%, European entities own 2.1%, and UK entities own 2%.

The largest institutional shareholder is the South African government through its Public Investment Corporation.

It owns 13.4% of Telkom, which, when added to the government’s 40.5% stake, brings the state’s total ownership to 53.9%. The share owned by South Africa’s Public Investment Corporation (PIC) has come down by 0.3% since the previous financial year.

M&G Investment Managers is the largest private owner of Telkom shares at 6.2%, which has increased by 0.5% since the previous financial year.

The company is a global investment manager headquartered in London and had a net income of R7.3 billion for the 2023 financial year.

The second largest private owner of Telkom shares is PSG Asset Management, with 4%. PSG has more than doubled its stake in Telkom, which sat at 1.8% in 2023.

Mazi Capital, based in Johannesburg, and Laurium Capital, based in Johannesburg and Cape Town, own a 3.6% and 2.8% stake in Telkom, respectively.

Only Mazi increased its stake in Telkom from 2.9%, whereas Laurium decreased its total investment from 3% in 2023.

Telkom’s other major foreign investor is The Vanguard Group, based in Pennsylvania, USA.

The investment manager’s total assets are worth R132 trillion, which includes a 2.2% stake in Telkom, an increase from 2% the previous year.

Another American investment firm that is among Telkom’s top ten stakeholders is Dimensional Fund Advisors, headquartered in Austin, Texas. It holds a 1.4% stake in the company.

The rest of the top ten comprises South African firms Ninety One SA, Camissa Asset Management, and Aluwani Capital Partners. They have a stake of 1.8%, 1.3%, and 1.2% in Telkom, respectively.

The graphs below show the breakdown of Telkom’s shareholders and the top ten investors.

Former communications minister and current deputy minister Mondli Gungubele previously said he did not want government to decrease its 40% stake in Telkom.

Gungubele said Telkom was still “strategic to the state’s programme.”

This was after former Telkom CEO Sipho Maseko led a bid to acquire a substantial stake in Telkom. MTN had also offered to buy the company.

Maseko’s Afrifund organisation and its partner, Axian Telecoms from Madagascar, presented an offer to the Telkom board in March, which was reportedly rejected.

The consortium reportedly tabled a R12-billion deal at R46 per share for a 35% stake in the company.

The PIC reportedly supported this bid, but Telkom rejected the offer outright — as it believed the valuation to be too low.

Telkom’s share price was trading at around R38 per share at the time.

MTN was another possible buyer of Telkom.

Although it has not indicated any intention to bid for Telkom again, MTN Group CEO Ralph Mupita previously stated that there remains a strategic rationale for consolidation between MTN and Telkom.

Mupita believes four mobile players are unsustainable in the South African market.

“You don’t see the third and fourth players having the capacity to invest in their networks,” Mupita said.

“Twenty years ago, it was very different. Voice-centric networks did not require as much capital, which means you could have four to six players.”

“Right now, with data networks, it is quite challenging for a number three. It is the case in Nigeria and Ghana,” said Mupita.

However, Telkom Group CEO Serame Taukobong has stated that Telkom doesn’t need a saviour to buy it — whether that be Maseko’s consortium, MTN, or another party.