Telkom a 'political football'

Government is certain Telkom will overcome the challenges it faces, says communications minister Dina Pule.

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The Department of Communications (DOC) says its voting at Telkom's AGM yesterday should not be singled out.

Media reports say government voted against the re-election of four Telkom directors and two new management share incentive schemes.

Among the directors not re-elected was independent non-executive director Sibusiso Luthuli, who analysts had pinned to take over from chairperson Lazarus Zim who stepped down from his position.

Democratic Alliance shadow communications minister Marian Shinn says the action is ominous for the future of liberalising telecoms and opening up the market in South Africa. "Yesterday's actions indicate that government wants to have a compliant board to support the ANC's developmental state and centralised control of the economy."

However, department spokesperson Siya Qoza says government voted within its rights, along with other stakeholders. "We don't see why government's vote is being singled out."

He adds that the process to fill the vacant chairperson position will be carried out in due course.

"We are seeing Telkom being used as a political football and the actions yesterday cannot be to anyone's benefit within Telkom, within its customer base and in its role in the telecoms sector," says World Wide Worx MD Arthur Goldstuck.

He adds that Telkom is desperate for a strategic refresh and instead it's being forced ever backward strategically.

Goldstuck also says Zim expressed anguish at the failed KT deal. "The KT deal could have done so much for Telkom and its collapse is the symptom of what's wrong with how government manages its stake in Telkom. It shows the negative influence government has when it chooses to intervene at a time when it should step out of the way.

"The irony is that when we want government to intervene, specifically for consumer strategy, it completely fails its own stakeholders, ie, the citizens of SA, but it will intervene in business decisions when we want it to stay out."

With regards to yesterday's developments, Telkom says it is "business as usual".

"The executive is in place and Telkom will continue to deliver on its strategy." The company adds that the issues that are hanging in the air are being dealt with at board level.

It says an alternative for Zim must be discussed and this will be done at the next board meeting in November.

At the conclusion of the AGM yesterday, communications minister Dina Pule said government is certain Telkom will overcome the challenges it is facing.

"The most immediate task of the Telkom leadership is to successfully deal with the anti-competitive claims against it. Telkom has to help the country's competitiveness by upgrading its infrastructure to deliver high-speed broadband for the benefit of our economy."

She added that the process to find a lasting and sustainable turnaround solution for Telkom is still within the Cabinet process. Pule initially had until the end of August to report back to Cabinet on a way forward for Telkom, after government binned the proposed purchase by Korea-based KT Corporation of 20% of the fixed-line company's shares, for R3.3 billion.

The canned deal, in conjunction with lacklustre results, saw Telkom shares under pressure.

"Telkom is well positioned to play its part in the socio-economic development of the country while enjoying a fruitful commercial existence," says Pule.