Telkom needs KT know-how: analyst

 ·14 May 2012

Telkom needs leadership that has experience in turning a struggling state-owned telecommunications company around, and knows the challenges which will be faced in achieving this goal. This is according to Hlelo Giyose, chief investment officer and principal at First Avenue Investment Management.

Telkom has been struggling financially, with the company’s share price plummeting by 40% over the last twelve months. Even a deal with KT Corp did not convince investors and did not do much to bolster the company’s share price.

However, Metropolitan Asset Managers analyst, Johan de Kock says that there is still hope for Telkom, stating that companies can sometimes “work themselves out of a mess”.

De Kock highlighted the example of Clicks, which was written off by some investors a few years ago, but introduced a strong CEO who turned the company around and showed healthy returns to investors.

However, Giyose argued that Clicks found the right CEO – David Kneale, an international expert from the UK’s Boots – to turn the company around, having had experience in doing exactly that before.

According to Giyose, Telkom should thus be led by an international CEO who has experience in the challenges which Telkom faces. Interestingly, Giyose suggested someone from Korea Telecom (KT) “who has done this before”.

“Government’s mistake with Telkom was that it should not have hired Pinky Moholi as CEO. They should have hired someone from South Korea Telecom and said ‘you have turned around an ailing state-owned enterprise…come and do it here.”

“Guess what Pinky has done – she has gone to get that South Korea help [with the KT Corp deal],” Giyose said.

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