Telkom lifts 9% as it confirms it received bid from consortium including PIC

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Shares in SA's third-largest mobile operator Telkom lifted more than 9% on Monday, when the company confirmed it is in the sights of a consortium led by former CEO Sipho Maseko and comprised of Axian Telecom and the Public Investment Corporation (PIC).

The Sunday Times reported at the weekend that Telkom had already rejected a bid made in March from Maseko's consortium of R46 per share - a more than 50% premium to its share price as of Monday's open - but that talks continue.

In morning trade Telkom's shares were up 7% to R31.93 but have still lost about a fifth over the past year. Click here for details of Telkom's shares as well as other info.

Telkom's shares had also lifted in late May, when Bloomberg reported that there were talks that could potentially give a grouping including the PIC, Maseko’s investment vehicle Afrifund, as well as Mauritius-based Axian Telecom, about a 50% stake in the mobile operator.

READ | Telkom jumps over 7% on reports of PIC-backed bid

Its depressed share price has added to speculation that major corporate activity is looming for the group, with and analysts have said MTN is likely to remain interested in the group's assets, notably its fibre business.

Earlier in May, Telkom's shares had crashed by double digits after it warned investors that its shift to its new digital strategy, as well as plans to cut as much as 15% of its workforce, would prompt more than R1 billion in retrenchment-related costs and R13 billion in writedowns of various business units in its year to end-March.

READ | Telkom crashes back to pandemic-era lows as suitors continue to circle

Telkom has been struggling under the weight of a debt pile that stood at a net R16.3 billion at the end of September, and in October MTN had walked away from takeover talks amid a citing a lack of exclusivity, while talks with data-only operator Rain were called off in January.

Telkom said on Tuesday that it "has received an unsolicited non-binding indicative letter from the consortium for the acquisition of a controlling stake in Telkom, the merits of which are being assessed by the Telkom Board of Directors in accordance with its fiduciary duties."

Telkom said it had requested the consortium provide additional clarity on several matters, including the proposed offer price and certainty of funding. "As such, discussions remain of an exploratory and non-consensual nature, there being no certainty that the outcome of these discussions will result in a transaction."