Shares in South African fixed-line phone operator Telkom fell more than 3% on Wednesday after a key lawmaker was quoted as saying the government would consider selling its 37,7% stake.

Business Report quoted MP Mpetjane Lekgoro, chairman of the parliamentary committee on communications, as saying South Africa could sell its Telkom stake if it made good business sense and would not inflate tariffs or impede the roll-out of communications to the poor.

"If the deal makes good business sense, and (the government) is confident that matters of pricing and universal coverage will go right ... then that will be a good time to sell," Lekgoro was quoted as saying in Johannesburg on Tuesday.

Shares in Telkom fell 3,33% to R151 by 11:05 GMT, underperforming the Johannesburg top-40 index, which fell 1,03%.

A spokesman at the department of communications said he was not able to comment immediately but was not aware of government plans to sell, or reduce, its stake in Telkom.

A Johannesburg-based telecoms analyst did not think the "throw-away" comment meant a sale was imminent, but said the government was probably considering offloading at least some of the stake, since it has pledged to further liberalise the industry.

"They don't need the cash in terms of privatisation targets, but in terms of making the government seem more independent, then a sale could be an imperative," he said. "There may well be some action."

However, the analyst said South Africa may have more trouble placing a stake in Telkom over the next year than previously, given the company could face action from unions over a string of job cuts and may also be hit by further deregulation.

Consumer groups have accused Telkom of overcharging customers, and the government says it is working on finding ways to reduce the price of phone calls and Internet access, which it says is inflating the cost of doing business.

Media reports have said the government is set to announce steps to further liberalise the industry, which it started to open up last year. The long-delayed launch of a second national operator is due later this year, which could provide the first fully fledged competition to Telkom's fixed-line business.

The government owns 37,7% of Telkom, black investor group the Elephant Consortium owns 10,1%, and institutional and individual shareholders own the rest.

Telkom floated on the Johannesburg and New York stock exchanges in March 2003.