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Treasury considers selling Telkom shares to keep SAA afloat

South African Airways (SAA) is once again turning to government for a bailout and The National Treasury is considering the sale of government’s stake in Telkom to fund it.

The airline is in trouble and needs a R10 billion bailout from government to keep operating.

“It’s an option among others we are looking into, and nothing has been finalised,” said Treasury spokesperson Mayihlome Tshwete, according to a report by Reuters.

Government holds 39% of Telkom’s shares and the Public Investment Corporation (government’s pension fund) holds another 11.4% of the network operator.

The statement from Tshwete follows accusations made by the Democratic Alliance’s shadow deputy minister of finance Alf Lees that Treasury was looking to sell its share in Telkom to fund the SAA bailout.

“We have seen this movie before and we know how it ends – SAA continues to fail and will need more bailouts,” said Lees in a statement.

The shadow minister went on to suggest that the only option left for government was to put SAA into business rescue and find private equity investors.

Earlier this month finance minister Malusi Gigaba told Parliament that it would not sell its stake in Telkom nor would it privatise SAA.

The DA has called the SAA situation “morally incomprehensible”.

“The effect of the numerous government bail outs and the dire financial situation at SAA is not limited to depleting the public purse but has also been partly responsible for ratings downgrades and negative outlook ratings from international agencies,” said Lees.

Gigaba will announce a financing option as regards SAA during his mid-term budget statement in October.

 

[Image  – CC 2.0 BY SA  Aero Icarus]

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