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Telkom's future in hands of Mangaung delegates

Telkom's future is in the hands of delegates to the African National Congress's (ANC's) electoral conference in Mangaung‚ who will weigh up the options the Department of Communications has proposed for reviving the company‚ according to Communications Minister Dina Pule.
Source: GCIS
Pule has put forward options to turn around the struggling telecommunications entity but details of those options‚ which have been presented to the Cabinet‚ have not been revealed.

The proposals came after the Cabinet rejected a proposed deal by South Korea's KT Corporation to buy a 20% stake in Telkom. The Cabinet said the company was a strategic asset.

In an interview with Business Day on Friday (7 December)‚ Pule said the ANC electoral conference in Mangaung would consider all recommendations taken at the ANC's policy conference in Midrand in June this year.

The final policy decision that would be taken at the conference would shape Telkom's strategy and the running of the telecommunications sector in general‚ Pule said.

"In Mangaung‚ we will take policy decisions that will guide me on how I should be running the department and the sector in general. But it doesn't mean that Telkom will not be working. The company is hard at work." she said.

There might be changes in the options that were submitted to the Cabinet and those changes would be influenced by operational progress made by Telkom‚ the minister said.

Pule said the sector that Telkom operated in changed rapidly and there could be more proposals that ANC structures would raise at Mangaung. There has been speculation that proposals might include the re-nationalisation and delisting of Telkom‚ a merger between Telkom's mobile unit 8ta and Cell C‚ and the merging of Broadband Infraco and Sentech's broadband infrastructure into Telkom.

In its recommendations at its policy conference‚ the ANC proposed a realignment of government shareholding in the telecommunications entities involved in the sector.

Although delisting or re-nationalisation had not been discussed‚ "we think we are fine" with Telkom as a listed company but it needed a "good business plan" that would help it build more revenue‚ Pule said.

If it "builds revenue then it means that it will have enough money to roll out infrastructure". The government has identified the rolling out of broadband as one of its priorities. Pule said Telkom was a strategic asset that needed to be used to help government fulfil its infrastructure mandate.

"My expectations on Telkom will not change. I want it to deliver on (telecommunications) infrastructure. There is no way we can invest so much and sit back and expect our investment to be looked after. I cannot leave it to chance."

Telkom should balance the needs of the government and its private shareholders‚ and she was hoping the board would be able to advise shareholders.

The government together with the Public Investment Corporation owns over 50% of Telkom.

"We have been working with Telkom up until now and continuing with the new board to try to see how to help the organisation.

"Our part is to ensure that‚ policy-wise‚ we are on the right track and provide the platform for the board to take decisions that will help them to change the situation of Telkom‚" she said.

Asked if she would support a merger between 8ta and Cell C‚ she said it would "depend if such a merger will give Telkom a competitive advantage and also (strengthen its) ability to deliver on its mandate".

Anything that will help Telkom stand on its own would be supported‚ Pule said.

She rejected criticism that she had interfered at Telkom‚ saying she had followed the correct structures and channels to communicate with the company‚ via its chairman.

The ANC has also proposed that Telkom's prices should be lowered and the quality be improved to do away with disrupted calls.

Pule said there might be a need to look again at the cost of communications‚ especially mobile prices.

"We have been trying to avoid regulations but we think Icasa (the Independent Communications Authority of South Africa) must come in for further regulation," she said.

A report by Research ICT Africa revealed that while end-user prepaid mobile telephony prices have come down, prices are still high‚ and South Africa's mobile termination rates are above the cost of an efficient operator.

It said South Africa continued to be among the most expensive countries in Africa for prepaid mobile usage.


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