Communications Minister Dina Pule says Telkom does not need foreign direct investment to achieve its turnaround strategy \u2014 all it requires are skills and competency\u201a Business Day reported Tuesday (17 July).<\/p>\n
The Cabinet in May rejected a R2.68 billion deal proposed by South Korea\u2019s KT Corporation to buy a 20% stake in SA\u2019s largest fixed-line telecommunications operator and gave Pule three months to come up with an alternative strategy for Telkom.<\/p>\n
Replying to parliamentary questions from opposition MPs yesterday on why the deal was scuppered\u201a Pule said Telkom was a key component in the government\u2019s efforts to improve skills and ensure its target of 100% access to broadband coverage was achieved by 2020.<\/p>\n
The government owns 38.9% of Telkom \u2014 51% if the Public Investment Corporation\u2019s stake is included.<\/p>\n
Pule said the Department of Communications was driving the government\u2019s policy to roll out broadband. The implication was that Telkom\u2019s turnaround strategy would be closely linked to the broadband plan.<\/p>\n
Last week\u201a the Treasury issued invitations to international and domestic banks and to the telecoms sector to take part in a “market sounding” on July 25-27 on achieving 100% coverage.<\/p>\n
The departments of communications and public enterprises and the telecoms regulator\u201a the Independent Communications Authority of South Africa\u201a would attend.<\/p>\n
The Presidential Infrastructure Co-ordination Commission\u201a chaired by President Jacob Zuma \u201a had identified broadband as one of 17 strategic infrastructure projects\u201a the invitation said.<\/p>\n
Only about 2% of South Africa\u2019s 50-million people have access to fixed-line broadband\u201a 4% to mobile personal computer broadband\u201a and 17% have access through their cellphones.<\/p>\n
The Treasury did not respond to questions about its market sounding yesterday. Analysts said the private sector remained confused over which government department was driving the broadband strategy.<\/p>\n
“National Treasury seems to be stepping in and doing what the Department of Communications says it is doing\u201a” Dominic Cull\u201a a telecommunications regulatory lawyer\u201a said yesterday.<\/p>\n
He said that the “vague reasons” given for scrapping the KT deal did not satisfy the telecoms sector\u2019s need for clarity on what the government intended to do to extend fixed-line services in South Africa\u201a or whether that would happen through Telkom.<\/p>\n
Avoir Research telecommunications analyst David Lerche said the key to the KT deal was “the smart people from Korea who would help Telkom. KT did amazing things in rolling out broadband in Korea.”<\/p>\n
He said the rationale behind the argument that Telkom did not need additional capital was sound. Telkom\u2019s recent decision not to pay dividends for the next three years meant its cash resources would be more readily available.<\/p>\n
“If that could be extended to four years\u201a it would bring Telkom close to what the KT deal would have brought in anyway\u201a” Mr Lerche said.<\/p>\n
Congress of the People MP Juli Kilian said she was concerned that Pule had said in her reply that Telkom did not need foreign investment. “This could be nationalisation by stealth\u201a” she said.<\/p>\n
Democratic Alliance MP Marian Shinn described the Treasury\u2019s invitation as “rushed”\u201a with companies being given only two weeks to respond.<\/p>\n
“It seems unrealistic to expect considered responses from the industry in such a short time\u201a” Shinn said.<\/p>\n
Related articles<\/strong><\/p>\n Telkom denies KT bribe allegations<\/a><\/strong><\/p>\n Friday 13th hits Telkom<\/a><\/strong><\/p>\n Telkom shares tank on KT Corp deal block<\/a><\/strong><\/p>\n Telkom agrees KT Corp deal at cut price<\/a><\/strong><\/p>\n Telkom shares slump below R20<\/a><\/strong><\/p>\n \u00a0KT Corp still an option: Telkom CFO<\/a><\/strong><\/p>\n