Telkom not waiting for govt guidance: reports

Telkom has a new CEO and a new strategy – and it won’t be waiting for permission and guidance from government to implement it, according to media reports.

On Thursday (28 March 2013) Telkom announced that it would be placing former Vodacom SA MD, Sipho Maseko, as the head of the company, effective 1 April 2013.

Speaking to the Sunday Times, Maseko said that he was aware that, to many, Telkom was regarded as a “basket case”, but he remained confident he could make a difference.

“The board appointed me so they obviously think there is a contribution that I can make,” Maseko told the paper.

“I think there are a lot of credible people and I am enthused by the appointment.”

Sipho Maseko
Sipho Maseko

Strategy shift

However, speaking to the City Press, Telkom chairman Jabu Mabuza said that “Maseko cannot turn the business around on his own”, saying that the new chief executive is part of a team and greater strategy.

“The objective of Telkom’s turnaround is to deliver sustainable performance. It is a strategy that requires a strong leadership team with the ability to ensure performance and execution and gain the support of all of its stakeholders,” Mabuzo said.

Government is currently the biggest stakeholder in the company through its own 39.8% stake in Telkom, and the 10.5% held by the Public Investment Corporation.

After blocking a deal between Korea Telecom and Telkom in June 2012, Pule was tasked with formulating a selection of strategies for the company moving forward.

By February 2013, these strategic options for Telkom had still not been tabled before Cabinet.

However, Mabuzo dismissed the notion that Telkom would simply follow a strategy handed to it by government through Cabinet and Communications Minister, Dina Pule.

“Telkom is a public, listed company that has got a lot of other shareholders other than government.” Mabuzo told The Sunday Times.

“Shareholders don’t give companies strategies. Shareholders approve strategies that deliver the return they expect from their investment.”

Mabuza said that Telkom now has a strategy that was put together by its board, and it would not be waiting for goverment for guidance.

Jabulani Mabuza
Jabulani Mabuza

Hurdles to overcome

Even with a new CEO and direction, Telkom still faces a tough time in the market.

While the operator still has to deal with competition-related fines that are being imposed on it, it also has to tackle the dismissal – or “voluntary resignation” – process within its own ranks.

The company currently faces a R449 million fine for abusing its dominance in the telecommunications market between 1999 and 2004 – a period in which Telkom was a monopoly provider of telecommunications facilities.

On 11 March, Telkom announced that management and bargaining unit staff would be afforded the opportunity of applying for voluntary severance packages.

The Communication Worker’s Union has threatened action against Telkom’s employee dismissal plan.

According to reports, Mabuza said that there is no “hit list” number of employees Telkom wants to get rid of, but rather the company is trying to create a leaner, more efficient operation that is more profitable for shareholders.

“For too long we haven’t done what we should have,” Mabuza said.

Telkom closed the week trading at R15.00 on the JSE, having rallied 5.6% on the appointment of Maseko. Despite the positive spin, Telkom has still lost 38% of its share value since last year.

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Telkom not waiting for govt guidance: reports