The Congress of South African Trade Unions (Cosatu) has lashed Telkom’s Khulisa discount share offer as “a threadbare effort to fool our people into thinking that the privatisation of the telecommunications industry will benefit them”.
Cosatu’s attack, which will not endear it to the government, came in the week Minister of Public Enterprises Jeff Radebe announced that it was all systems go with the listing of Telkom. The listing on the local and New York exchanges will take place next month.
Although Radebe would not confirm it, the listing is expected to raise R6-billion from the sale of between 20% and 25% of the company. A further 30% of Telkom is held by SBC of the United States and Telekom Malaysia.
An integral feature of the initial public offering (IPO) is the Khulisa discounted share scheme, which Radebe said was “open to all South Africans, with a built-in preference for historically disadvantaged indivi-duals and stokvels”.
Khulisa has a lock-in period of three months and a limit of R5 000 a person. It includes loyalty bonuses for people who retain their shares for a minimum of two years.
In a statement, Cosatu complained that people who earned R5 000 a month could simply not afford to purchase shares, even at a discount. It cited Statistics South Africa’s Income and Expenditure Survey of 2000, which showed that this group spent 0,05% of its money on shares.
The federation highlighted the huge social cost of privatisation. It lamented the soaring cost of basic telephone services, such as local calls and rentals — up by 13% — while services aimed at the rich remained relatively affordable.
Cosatu also emphasised the scale of job cuts in Telkom, saying the workforce had been slashed by a third during its period of monopoly between May 1997 and May last year. The South African Communist Party was more equivocal, expressing support for the broad-based principle of extending empowerment opportunities to poor South Africans of all races, while opposing the privatisation of Telkom.
They described the privatisation as “ill considered … with plenty of spin, and without much strategic social and economic consideration”.
The SACP supports the Solidarity Workers’ Union, which threatened court action over the Khulisa scheme on the grounds that it was racially discriminatory. Solidarity demanded that income levels, rather than race, should be the basis for discounted share allocations.
After meeting the government and extracting a concession that Khulisa would not discriminate on the grounds of race or gender, the union dropped its court threat.
Around a million people are said to have registered for the Telkom share offer, a response described as “unprecedented” by the IPO coordinators. The public can also participate through straightforward, unrestricted share purchases.
Telkom looks set to enjoy a prolonged period of monopoly after the process of awarding a majority stake in the second national operator continues to be marred by uncertainty over the credentials of the two bidders.
This week the Independent Communications Authority of South Africa (Icasa) found itself under mounting pressure to reject the bids of Optis and Goldleaf, the consortia vying for a majority stake in the second operator.
An independent consultants’ report, which advises but does not recommend, found holes in both bids. Optis was found to have plagiarised parts of its bid, while Goldleaf could not show it had the experience to service half a million customers.
Empowerment partner Nexus, which holds 19% of the second operator, called for the bid to be rejected, restating the widely held view that it should be allowed to press on with its partners, Esitel and Transtel.
This, however, would leave the government with an influential stake in both telephone operators, as Esitel and Transtel are respectively owned by Eskom and Transnet. If a foreign equity partner is found, the two will jointly take 30%.