Telkom's delisting and renationalisation are expected to be a key outcome of the African National Congress's (ANC) policy conference next week as the party and the government battle to improve SA's broadband services.

The Cabinet's recent rejection of the R3,3bn offer by South Korea's KT Corporation to purchase a 20% stake in Telkom has paved the way for the government to take outright control of the ailing company.

Telkom is unique within the basket of state-owned enterprises as it is listed on the JSE. The government owns 39,8% of the company, and the Public Investment Corporation (PIC) owns 12%.

A source close to the Department of Communications said yesterday : "The rejection of the deal is not as silly as some may think.

"The government is looking for a way to direct Telkom to meet its development agenda without being hampered by the rules of the JSE.

"If one looks at the Telkom share price since Cabinet's refusal (for KT to purchase a stake), then it is a good time for the government to buy the shares.

"The issue with Telkom is that it is just too big to fail. Every bank and mobile network operator depends on its infrastructure."

Telkom's share price closed yesterday at R20,35 - slightly higher than Friday's close of R19,85. However, it was far off its one-year high of R37,50 touched on June 1 last year. Its one-year low was R19,01 - when the Cabinet rejected the KT deal earlier this month.

The ANC wants 100% of the population to have broadband access by 2030. But as a discussion document for its policy conference notes, Telkom has only provided broadband services to 8% of South Africans.

ANC spokesman Jackson Mthembu said he was not aware of any call to nationalise Telkom, or if it would be made at the policy conference. "I suggest that people read the ANC's economic and ICT discussion documents," he said yesterday.

The ANC's information and communication technology policy document notes that in recent years SA "lagged behind" in a number of key global information technology indicators, especially on universal access to the internet, broadcasting and e-governance.

"This as a consequence of fragmented and uncoordinated policy and institutional arrangements. As a result, we have not fully exploited the opportunities presented by our technological advances," the document reads.

"Even on the continent, SA has lost its position as a leader in the roll-out of ICT services. Senegal and Egypt are seen as leaders.

"While mobile or cellular communications have reached over 100% penetration, the same cannot be said of the high-speed internet networks with penetration levels of less than 20% of the population."

ANC ally the Congress of South African Trade Unions (Cosatu) has been pushing for the government to take complete control of Telkom to address its failure to provide telephone and internet connectivity to most of the population.

"It is a long-standing policy of ours that all strategic companies should be under complete state control and Telkom is one of those," Cosatu spokesman Patrick Craven said yesterday.

He said Cosatu was still finalising its response to the ANC's ICT policy discussion document.

The Communications Workers Union, a Cosatu affiliate, called on the government to take full control of Telkom.

The union said telecommunications was a strategic sector that should be "firmly under state ownership and control".

"We are concerned there are some neoliberal individual ministers who fancy themselves above the Cabinet collective, and openly oppose the decision of Cabinet. We condemn this uncomradely behaviour in the strongest possible terms," the union said in a statement yesterday.

"Government must consider engaging the PIC and it must consider digging into its coffers to acquire a greater stake in Telkom, so that Telkom is once again state-controlled to fulfil developmental priorities."

The Cabinet gave Communications Minister Dina Pule three months to find an alternative strategy for Telkom. She met last week with the government representatives on Telkom's board, but the nature of the discussions was not disclosed. "Telkom will work on proposals . and present them to the minister. However, the minister will not present any alternative at the policy conference," her spokesman, Siya Qoza, said yesterday.