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tzdata-update was rewritten in a Red Hat patch
(glibc-rh1200555.patch) but it misses a feature of
the old tzdata-update that was the chunk:

---8<---
  long int sret;
  sret = INTERNAL_SYSCALL (fchmod, err, 2, fd, 0644);
  if (INTERNAL_SYSCALL_ERROR_P (sret, err))
    goto clean_up;
---8<---

  So, depending of the umask set (e.g. 0077), it may
create a /etc/localtime that is unreadable by non root
users.

  Test case should be simple, just set the umask and
run /usr/sbin/tzdata-update.

Agreed, we should restore the fchmod call.

The Lua version of tzdata-update in the tzdata package is not affected because RPM resets the umask to 022:

[root@lenovo-thinkstation-01 ~]# rm -f  /etc/localtime
[root@lenovo-thinkstation-01 ~]# rpm -e --nodeps tzdata
[root@lenovo-thinkstation-01 ~]# (umask 077; rpm -i tzdata-2016c-1.el6.noarch.rpm)
warning: tzdata-2016c-1.el6.noarch.rpm: Header V3 RSA/SHA256 Signature, key ID fd431d51: NOKEY
[root@lenovo-thinkstation-01 ~]# ls -l /etc/localtime
-rw-r--r--. 1 root root 3519 Sep 15 07:32 /etc/localtime

[root@lenovo-thinkstation-01 ~]# rm -f  /etc/localtime
[root@lenovo-thinkstation-01 ~]# (umask 077; yum reinstall tzdata-2016c-1.el6.noarch.rpm)
…
Installed:
  tzdata.noarch 0:2016c-1.el6

Complete!
[root@lenovo-thinkstation-01 ~]# ls -l /etc/localtime
-rw-r--r--. 1 root root 3519 Sep 15 07:33 /etc/localtime

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory, and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

https://rhn.redhat.com/errata/RHSA-2017-0680.html