KT and Telkom have reached a preliminary agreement on the Korean operator acquiring a 20 percent stake in the South African incumbent. The two have been in talks since October 2011, and the latest agreement sees KT paying a lower price of ZAR 25.60 per Telkom share, due to the drop in share price at the South African company. This is a 9.9 percent premium on Telkom's share price the day before the announcement, but below the ZAR 36.06 first announced last year. If Telkom pays further dividends before a final agreement is reached, the price could cut by another 20 percent, it said. A final agreement depends on securing approval from the South African government, currently Telkom's biggest shareholder with a stake of 50.7 percent. Telkom would issue new shares to KT, diluting the government's stake to less than 50 percent. KT has also conditioned the deal on a satisfactory outcome of the ongoing competition investigation into Telkom, which could see the company paying fines of ZAR 3.5 billion for abuse of its dominant position. As part of the deal, the companies also plan a five-year agreement on management services and cooperation on strategic and business issues.
