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Date : 04/03/2003
Source: Ministry of Public Enterprises
Title: Radebe: Telkom listing event


SPEECH BY JEFF RADEBE, MP, MINISTER OF PUBLIC ENTERPRISES, AT THE TELKOM LISTING EVENT, JSE Securities Exchange South Africa, 4 March 2003

Honourable Ministers,
The Chairman and Board of Telkom,
Distinguished guests,
Ladies and gentlemen - good morning.

Welcome, all of you, to the world of sharing!

It is a great honour for me to stand up here and share with you the momentous occasion of Telkom entering its life as a publicly listed company on the JSE Securities Exchange South Africa, and to watch the first of many trades of "TKG" on the JSE SETS system.

It is truly a very proud moment - our first listing of a state-owned enterprise, and a highly successful one at that. The South African Government believes that this listing is a clear demonstration of our capability to restructure state-owned enterprises.

Government set itself both social and commercial objectives for the Telkom IPO and as I stand here today I can proudly say that Government has indeed achieved what it set out to do.

The objectives we set included championing the managed liberalisation of the telecommunications sector, broadening ownership by ordinary South Africans in entities such as Telkom, and promoting South Africa as an investment destination.

Last but not least, we have realised proceeds of R3.9 billion, a significant contribution to the fiscus.

The listing is Government's flagship restructuring project in the current financial year. It is consistent with our broad restructuring programme and an integral part of the macro and microeconomic reforms that are currently taking place in our country, which are aimed at ensuring that South Africa continues to build its global competitiveness ratings.

The listing is a significant milestone on the journey that we embarked upon in 1997, when we entered into partnership with Thintana, representing SBC and Telekom Malaysia. They have proved to be worthy partners in providing support, assistance and direction to Telkom over the past five years.

It was anticipated then that, at an appropriate time, we would introduce the company to the South African and international stock exchanges, and they have worked tirelessly by our side over the past two and a half years, since we took the decision to give effect to that strategic objective.

Today is an appropriate moment to reflect briefly on how we have fared in meeting our objectives.

Firstly, there can be no doubt that we have broadened the ownership of Telkom and brought in tens of thousands of new investors. We have made a significant contribution to the de-racialisation of the securities environment, and made an equally significant contribution to black economic empowerment.

The listing follows an unprecedented public education campaign that took the IPO message, and broad learning about the benefits of a savings culture, to the furthest corners of our country. At the same time, we did not shirk from our responsibility to highlight the risks involved.

Adult literacy workers commandeered church halls, army bases and even prison halls to get the message across, and in the process provided valuable life skills and education to almost 50 000 people. The process mirrored the richness of our multifaceted democracy, and saw multilingual presentations to communities across the length and breadth of our country - rich and poor, young and old, urban and rural.

This drive into the heart and soul of South Africa was not just about the IPO - it was a broad-based education campaign, deeply rooted in community structures and generating tremendous excitement. Clearly, from the interest expressed, it bodes well for future projects of its nature.

What, then, are the results of this initiative?

It is, quite simply, one of the largest retail responses ever experienced in South Africa. For us, this is an extraordinary manifestation of the appeal that a national treasure such as Telkom has to all of us as South Africans.

We are humbled by this manifestation of interest, and feel compelled to thank, in particular, the thousands of first-time investors who -- under difficult economic conditions -- have realised the value of sharing and are now proud members of the Telkom shareholder family.

This transaction is truly groundbreaking. For the first time in our history, stokvels and societies are able to own a piece of Africa's telecommunications giant. Burial societies, church groups and small savers are now integrally involved in its growth and development, and will share in the fruits of that process.

As an illustration of the extent of this involvement: Over 127 000 South African retail investors have taken up the offer, with South African retail demand representing approximately 7% of the deal size. This exceeds the initially anticipated figure of 5%. We are delighted that 60% of applicants came through the Khulisa offer, which was specifically designed for historically disadvantaged individuals.

Ladies and gentlemen, we also cannot ignore the fact that today's listing clearly demonstrates the resilience of the South African economy. The fact that this is the only significant IPO in European and African markets clearly demonstrates that our economy has weathered the storm better, and bodes well for future transactions of this nature.

This view is reinforced by the overwhelming interest shown by both domestic and institutional investors, in response to an extensive road show process that canvassed institutions in South Africa, Europe and the US.

We have received substantial demand from institutions of the highest calibre, represented by our leading institutions in South Africa and their counterparts internationally.

We attach significant importance to this, as we see these institutions as long-term fellow shareholders alongside ourselves - and our partners, Thintana - providing support to Telkom and its management in implementing future strategies.

The institutional offer was significantly oversubscribed and exceeded our expectations - particularly in the challenging markets that confront us today.

The Government took an informed decision to adjust the price range, in recognition of the current market environment. As a result, we went to the market at a price range, which we believe is consistent with the valuation determined by potential investors domestically and internationally, and in recognition of the significant interest that had been cultivated among prospective investors towards the end of last week.

Last night we determined a final price of R28. This price, we believe, represents a tremendous achievement in extremely difficult markets and is an accurate reflection of the value inherent in Telkom at the current time.

We believe it provides a realistic reference point against which Telkom can be properly measured as a publicly traded company into the future.

In line with this, we believe the listing of Telkom is a clear demonstration of Government's commitment to good governance, full disclosure and ensuring that our leading enterprises can be transparently measured against their peers in South Africa and internationally.

We have full confidence in Telkom's ability to demonstrate its unique strength and relative competitive advantages and, for us, the best evidence will indeed be the performance of this company as a listed entity over time.

I would like to take a moment to thank the enormous number of institutions and individuals who have been responsible for bringing this process to a successful conclusion.

In particular, I would like to thank my fellow Ministers - past and present - and their respective teams for the commitment and attention they have paid to this transaction.

Secondly, I would like to thank the Board and management of Telkom and Vodacom. I would also like to single out the JSE Securities Exchange South Africa, whose officials worked tirelessly with us to create an unprecedented transaction in terms of its size and scope.

We should especially welcome the employees of Telkom, who will become shareholders in this great company through the Diabo Trust.

The ANC-led government appreciates and acknowledges the contribution of organised labour to the success of the listing, and we look forward to monitoring the rollout of the IPO together.

In the same vein, I would like to specially acknowledge our partners in Thintana, who led the way for all the other shareholders who have now joined us as investors in Telkom.

I would also like to acknowledge the support of all our respective advisors in South Africa and internationally and all those who have played a part in making the IPO such a success.

Let us also thank the 1.5 million South Africans who expressed an interest in the IPO during the registration phase. As Government, we deeply appreciate the time they have spent attending our educational meetings, reading our documentation and taking the time to fill in and dispatch the necessary documentation.

In conclusion: Telkom will be listing on the New York Stock Exchange later today. This evening, a small government delegation and representatives from Telkom management will travel to the United States. On Thursday morning, we will attend a function similar to this morning's auspicious occasion, to mark the listing of Telkom on the New York Stock Exchange by the famous "ringing of the bell" on the podium of the exchange.

We are effectively taking the company, our country and its economy onto another global stage, into one of the engine rooms of the global economy.

South Africa's flag will be flying high outside the NYSE building. Inside the building, from around lunchtime today South African time, Telkom will be listed on the NYSE trading screens.

I am sure we all wish Telkom's board and their management team the very best in leading Telkom into the next phase of being an internationally accepted listed public company.

The New York listing is already being closely followed in the US, and is generating excitement in the investor community.

And who knows: One day soon, we may have some of those NYSE traders greeting each other with the words: "Molo mhlobo wam!"

Thank you.

Issued by Ministry of Public Enterprises
4 March 2003

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