DoC hints at mobile and fixed-line partners for Telkom
Minister of Communications Dina Pule has hinted that a revised strategy for Telkom would include possible partners for fixed-line and mobile telephony.
Pule says that government will also work to ensure that the vacant board seats at the fixed-line incumbent are filled by the end of this calendar year.
Government, which has a 39.8% stake in Telkom, and led by Pule, blocked the appointments of four directors at the group’s AGM on Wednesday (24 October).
Telkom chairperson Lazarus Zim, Julia Hope and Jackie Huntley stepped down from the group’s board.
“Our decisions at the recently concluded Telkom AGM were informed by government’s view that corporate governance and appropriate management of State-Owned Companies (SoCs) cannot be left to just any interpretation of our expectations,” Pule said in a statement on the weekend.
Pule’s statement continued:
Like other SoCs in which Government is a key shareholder, we are using our vote to drive and maintain:
1. business stability and viability;
2. service delivery to the public;
3. adherence to corporate governance; and
4. the link between the objectives of government and the commercial imperatives.Those objectives include, amongst others, delivering value to the broader South African community and to our co-shareholders and investors.
In the wake of the outcomes of the AGM, we are now focused on enhancing and protecting Telkom’s share value whilst balancing that with the objectives of providing affordable connectivity to all South Africans. This will be done through appropriate shareholder management input.
We have a management team in place and we are moving with speed, along with our fellow investors, to ensure that the vacant board seats are filled by the end of this calendar year. We also expect Cabinet to pronounce on the options that are available to find a lasting and sustainable solution for Telkom’s turnaround.
That solution must be underpinned by the creation of a balance between contributing to delivering the socioeconomic development objectives of this country whilst simultaneously facilitating a fruitful and commercially viable existence of Telkom.
That said, the anti- competitive claims against Telkom still need to be appropriately and successfully handled. This is a key Telkom challenge that its leadership will have to contend with in the immediate term and into the future.
In general, the Department of Communications has had to relook at all of its six priorities. Telkom is part of that priority set. Indeed we have been working on a revised Telkom strategy. Part of this Telkom strategy – started in the 2006/07 investment period – is already under implementation.
The rest of that strategy, which pertains to broadband rollout and possible partners for fixed line and mobile telephony will be spoken to by March 2013.
The minister noted that such a strategy needed Cabinet and industry’s approval and endorsement.
Telkom’s future has been cause for much speculation in the telecommunications sector in 2012, particularly after government’s decision to block a bid by South Korea’s KT Corporation to buy a 20% in the firm in June.
Rumours have included talk of nationalising the group, and more recently, speculation has included a potential merger between 8ta, Telkom’s mobile arm, and Cell C.
Pule reiterated that Telkom was a strategic asset that government would like to involve in increasing the country’s broadband penetration and telecommunications’ services footprint “for the benefit of all South Africans”.
“As we drive our mandates of digital inclusivity, we will seek to eradicate uncertainty in all the SOCs that report to the Ministry of Communications’ custodianship. Cabinet supports us in these initiatives,” Pule said.
Telkom recently warned that its headline earnings per share from continuing operations for the six months ending September 2012 are expected to be at least 65% lower than the prior comparative period.
Its shares, meanwhile, have declined more than 40% in 2012, trading at less than R18 on Monday (29 October).
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