UPDATE 2-KT Corp in talks on $600 mln Telkom stake
By Hyunjoo Jin and Helen Nyambura-MwauraSEOUL/JOHANNESBURG, Oct 14 (Reuters) - KT Corp
is in talks to buy a 20 percent stake in South African group
Telkom for about $600 million, giving South Korea’s No.
2 mobile operator a foothold in the fast-growing continent as
opportunities to expand at home slow.Asian companies, which have been scouring Africa for natural
resources for years, are now looking to do more than commodities
deals as African consumers have more to spend.Telkom, South Africa’s struggling fixed-line operator, said
on Friday that, should the talks be successful, it would issue
new shares at 36.06 rand apiece — a 12 percent premium to
Thursday’s close — to KT, Korea’s top fixed-line provider.That would represent a 12 percent premium to Telkom’s
closing price on Thursday. Telkom shares were up 6.0 percent at
34.07 rand at 0935 GMT.KT has been looking for overseas acquisitions as it has
fewer growth opportunities in its crowded home market.”The deal, if agreed, would have an implication as KT is
advancing overseas as the domestic market is maturing and facing
regulations. What is important is how it will grow its overseas
operations,” said Yang Jong-in, an analyst at Korea Investment &
Securities.Telkom, battered in recent years by steadily falling
fixed-line revenue and expensive blunders in Nigeria, has been
looking to offset shrinking demand for its core business by
pushing into new businesses, such as mobile phones and new
markets.It last year launched a mobile business which has yet to turn
a profit. Analysts have said it will face an uphill battle in a
market already dominated by Vodafone unit Vodacom
and MTN Group .Telkom expects earnings to fall at least 40 percent in the
six months to end-September.While not a rapidly expanding economy, South Africa offers
foreign entities an entry point into the continent.In June, U.S. retailer Wal-Mart finalised a $2.4
billion bid for 51 percent of local retailer Massmart ,
and has said it was looking to expand further in Africa.Japanese group Kansai Paint this year finalised
control of local paint firm Freeworld Coatings . A
Kansai executive told Reuters last year it could eventually look
to expand into other regions of Africa.Samsung Electronics said this year it aimed to
boost African revenue fivefold to $10 billion by 2015.Deutsche Bank (DBKGn.DE) was Telkom’s lead financial advisor
for the deal. It is also being advised by UBS .
($1 = 7.928 rand)
