Snubbed KT not yet giving up on Africa
SEOUL — South Korea’s KT Corporation — snubbed by the government in July after it had offered to buy 20% of Telkom for R27bn — on Wednesday announced its second attempt to gain a foothold in Africa.
KT Corporation is bidding to acquire 53% of Moroccan telephone company Maroc Telecom from France’s Vivendi. Maroc Telecom is almost a third-owned by the kingdom of Morocco.
"We submitted a nonbinding offer on December 17," said a KT spokesman, who declined to provide further details.
Vivendi is trying to sell its 53% stake in Maroc Telecom as the French group pushes forward with a strategic review to focus on its media holdings, notably Universal Music Group. Analysts said a deal could be worth as much as €5.5bn.
Telkom’s share was sent plunging to a low of R14.91 on December 7 after the Cabinet’s decision to reject KT’s R25.60 per share offer in May — which was cut from an indicative offer of R36.06 made in October last year, before KT’s due diligence. Telkom’s share price loss for the year to date is 41.2%, making the JSE’s fixed-line telecommunications index — whose sole constituent is Telkom — this year’s worst performing sector.
Communications Minister Dina Pule said at the ANC’s conference in Mangaung earlier this month that the government’s plans for Telkom following its rejection of KT’s bid would be discussed by delegates.
A short list of bidders for Maroc is expected to be announced next month before a binding bidding process scheduled for March. KT faces competition from France Telecom, Qtel, the telecoms group controlled by Qatar; and Etisalat, the United Arab Emirates-based telecoms rival.
KT has sought to offset stalling domestic growth by expanding abroad, selling IT consulting services and mobile content to operators in emerging markets. It has investments in Mongolian and Uzbekistani operators and has built networks in Rwanda and Congo. But its overseas expansion efforts have been hampered by a lack of experience and limited financial firepower.
"KT has to venture abroad as the domestic telecoms market is already saturated. It is especially interested in emerging markets such as Africa, where it can have additional growth by installing telecoms networks and offering IT consulting services," said Choi Yun-mee, an analyst at Shinyoung Securities. "But it remains to be seen whether KT can actually get the deal done, given many political factors in play. And the deal looks too big for KT alone to pursue."
Concerns over financing the deal weighed on KT shares.
KT plans to transform itself from a telecoms carrier to a global media distributor. It has set a target of deriving 10% of its revenues from overseas in three years; compared with 4% last year.
Financial Times, Staff Writer