Telkom targets property sell-off

Telkom wants to cut its massive R2 billion annual property-related operating costs by selling off some of its property related assets.

In a presentation at an Investor Day in Pretoria, on Monday (4 August), Telkom chief procurement officer, Ian Russell, addressed Telkom’s current property portfolio which consists of 23 million square metres of land and 2.2 million square metres of buildings – of which 1.7 million is owned.

He said that in FY14, Telkom incurred more than R2 billion on property related operating
costs. In total 15,345 locations form part of the property portfolio, of which 12,762 are masts or towers, the group said.

Russell said that the group would look into a strategic end to end review of the portfolio, to be completed in the short term.

Going forward, the group would look to identify and sell excess properties. It would also target a reduction of property related operating costs.

Key initiatives will include:

  • Implementation of ‘workplace of the future’ office standards;
  • Head Office consolidation;
  • Excess land and building asset sales;
  • Aggressive energy reduction initiatives;
  • Optimisation of the facilities management value chain

Third party costs

Telkom said it wants to cut a large chunk out of its third party cost base, currently at R17 billion, over a three year period.

Russell said that the group would focus on investing in the Procurement team and capability to improve execution.

“The procurement value delivery plan is focused on taking as much as possible out of the FY14 third party cost base of R17 billion over a three year period,” Russell said.

Telkom would look at creating a structured transformational sourcing programme, potentially including some elements of:

  • Call centres;
  • Statement printing;
  • IT development and maintenance;
  • Supply chain distribution centres;
  • Retail stores;
  • Infrastructure and network maintenance

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Telkom targets property sell-off