Telkom chair has instilled confidence: PIC
The Public Investment Corporation (PIC) says that newly appointed chairman of Telkom, Jabulane Albert Mabuza, has instilled confidence following his strong worded comments regarding the conflict of interests between stakeholders.
Telkom appointed Jabulane Albert Mabuza as chairman on 16 November. He was previously an MD of Southern Sun Gaming, GCEO of Tsogo Sun and chairman of the Board of South African Tourism.
Analysts have expressed concern over government’s increasing role in the running of Telkom in recent months.
While government, through cabinet, is expected to announce a number of turnaround options available to the group before March next year, Mabuza told a media gathering that a shareholder could not set strategy for the company.
“The day shareholders give you a strategy, they may as well come and run the business,” he told Business Day.
“The government continues to be responsible for policy, but the strategy of Telkom rests with the board of Telkom.”
Government is Telkom’s largest shareholder with a 39.8% stake, while state-owned financial services firm, Public Investment Corporation owns 10.9% in the telecommunications group.
Cabinet, along with the Department of Communications, views Telkom as a strategic asset which will help, among other things, to ensure of broadband penetration in SA to 100% by 2020.
Communications minister Dina Pule was earlier this year tasked with researching and presenting to cabinet, several potential strategic options for Telkom.
“That solution must be underpinned by the creation of a balance between contributing to delivering the socio-economic development objectives of this country whilst simultaneously facilitating a fruitful and commercially viable existence of Telkom,” Pule said in a statement.
The PIC expressed its satisfaction with the appointment of Mabuza.
“The newly appointed chairman’s initial engagement with the media has instilled confidence in that he has highlighted the need to resolve the perceived conflict of interests from a minority shareholders’ point of view, which is policy development (government) and the strategy function (management and the board) within the group,” said Maqhawe Dlamini, GM equities at PIC.
“Recognising the problem is a giant leap towards a viable solution, we believe,” Dlamini said.
Telkom financials
On Monday 19 November, Telkom recorded a 48.9% drop in group profit before tax of R547 million for the six months ended September 2012.
The group reported a marginal decline in revenue for the six months ended September 2012, but an 80.6% decline in headline earnings per share to 37.2 cents.
Mobile revenue increased 198.3% to R898 million, while 8ta reported an ebitda loss of R587 million, down from R1.066 billion before.
Telkom highlighted active mobile subscribers of 1.495 million, a 2.2% market share in SA (0.9% September 2011), with a blended ARPU of R68.62.
“The Telkom results are a reflection of the challenges the business is facing, that call for a rethink of its strategy. The fixed line business continues to be pressured, data not impressive and a lot of cash is still being spent on the mobile business,” Dlamini said.
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