Treasury: Sale of Telkom shares to fund SAA bailout an option

It emerged in Parliament on Wednesday that Treasury was looking to sell its stake in Telkom to fund SAA

FILE: Finance Minister Malusi Gigaba. Picture: Reinart Toerien/EWN.

JOHANNESBURG – The National Treasury has reportedly confirmed that government is considering selling its stake in Telkom to fund yet another South African Airways (SAA) bailout.

Finance Minister Malusi Gigaba's spokesperson Mayihlome Tshwete says it’s among the options being looked into but that nothing has been finalised.

Earlier on Wednesday, Deputy President Cyril Ramaphosa dodged questions in Parliament on whether government has approved a plan to bail SAA out with R10 billion.

“The issue that Honourable Lees is talking about… we continue to discuss state-owned enterprises and assets that are owned by the government…”

The airline runs one of Africa's biggest fleets but is loss-making. It received state funds in July to help to repay debts and also depends on government debt guarantees of about R20 billion.

"It's an option among others we are looking into, and nothing has been finalised," Tshwete said.

Mayihlome was responding to comments by opposition Democratic Alliance party lawmaker Alf Lees, who told Parliament that Treasury was looking to sell its stake in Telkom to fund SAA.

Gigaba told Parliament on 4 August the state would not privatise SAA or sell its stake in Telkom to fund bailouts of struggling state firms.

The government holds a stake of about 39% in Telkom, while government pension fund the Public Investment Corporation holds another 11.4%.

Gigaba has said he would disclose a preferable financing option for SAA at the medium-term budget statement in October.

Deputy Finance Minister Sfiso Buthelezi earlier on Wednesday told Parliament SAA would not be allowed to "go under."

The Democratic Alliance party has called on the government to privatise the airline.

"We have seen this movie before and we know how it ends – SAA continues to fail and will need more bailouts," Lees said in a statement, adding that bailouts of state firms were depleting the state coffers and were also a cause of credit ratings downgrades.

Credit ratings agencies say SAA should be reformed and cite the cost of propping it up as a threat to South Africa's credit rating. S&P Global Ratings and Fitch have downgraded South Africa's credit to "junk" status.