The listing of South Africa's fixed-line phone monopoly Telkom has been delayed because of strong demand for shares on their first day on offer.

The much delayed privatisation, the country's largest to date, is seen by foreign investors as a key indicator of the government's commitment to free-market policies.

"In light of the unprecedented response to the general retail offering ... We have been advised to extend the application phase with the listing date ... Now scheduled for March 4, 2003," the Department of Public Enterprises said in a statement.

The listing of a quarter of the group is worth up to 6.8bn rand (�471.4m; $776m), valuing the company at about 25bn rand.

The government has the option of increasing its offering to 30% if demand far exceeds the 139.3 million shares on sale.

Budget bonus

The float had been scheduled for 25 February, the day before the finance minister is due to present his budget for the year ahead.

The sale accounts for the bulk of the 12bn rand privatisation revenues for the current financial year.

The government has been preparing the Telkom sale for years by cutting jobs and costs, but it is now valued at a only a quarter of what it was at the peak of the telecoms boom in 2000.

The group is already 30% jointly owned by SBC of the US and Telekom Malaysia.

Strong demand

Demand for Khulisa shares - offered to blacks at a 20% discount to encourage their participation in the white-dominated economy - was reportedly strong.

Foreign demand for shares was already expected to be high after the rand gained 9 cents on Wednesday as foreign investors bought currency ahead of the sale.

The rand gained another 10 cents on Thursday.

Demand was not dampened by the industry regulators decision on Wednesday to reject bids for a licence to rival Telkom's fixed-line monopoly.

Investors were waiting to see what kind of competition Telkom would have, but may now have to wait at least another year.

The Independent Communications Authority of South Africa (ICASA) said there were "material deficiencies" in the bids by Optis and Goldleaf.

Minister Ivy Matsepe-Casaburri will announce her final decision on the second licence on Saturday.