Telkom says that it wants more equity ownership at Siemens Communications if it is to continue doing business with the company`s communications division.
Siemens has confirmed this, stating that it received a letter from Telkom advising it to improve its BEE equity ownership profile in its communications business unit.
Siemens Southern Africa group CEO Pete Da Silva said he had received a letter outlining the concerns, but stressed that carrying out empowerment at a specific business unit level was not the strategy he preferred.
However, he said that if he had to resort to doing so for the sake of maintaining a good business relationship with Telkom, he was willing to.
"If I have to bring in another partner at that level, I will, but I would rather have that partner involved with the company at the group level at a later stage," said Da Silva. He further explained that a better option, in his opinion, would be to handle empowerment at a group level, which would have a "dilution effect" into separate business units.
"Essentially, Telkom does a lot of business with our communications division and it would like to see that entity better empowered," he notes.
At the moment, Siemens Communications is 60% owned by Siemens Southern Africa and 40% owned by Reunert. The current equity ownership in the local Siemens group translates to the telecommunications unit being 15% equity empowered.
Telkom explained that in order to keep track of its own commitment to empowerment, it conducts regular reviews with all its suppliers to ensure that they too fulfil the requirements. These cover equity ownership, management, employment equity, skills development, preferential procurement, enterprise development and social development.
"A recent review on one of our major and highly valued suppliers, Siemens, highlighted Telkom`s concern that it does not adequately meet all requirements in the fields of empowerment concerned. Since we regard our partnership with Siemens as valuable, this feedback was shared with the company, with the aim of assisting it to address identified gaps," Telkom said.
Apparently, Telkom would like to see at least a 25% BEE equity ownership in Siemens Communications, a level which Da Silva says he is willing to achieve. However, he says that this will not be a simple transaction due to the size of the communications entity.
He says he is not comfortable with bringing in another BEE partner at the moment. Siemens already has various partners, with the likes of Sekunjalo and Africom on its main board.
Da Silva says his company has two options at the moment: it can either opt to increase its BEE equity stake from its side or wait for Reunert to enter into an empowerment deal of its own.
Reunert is reluctant to disclose its definite plans regarding the matter. However, it said that as Siemens Southern Africa is the majority shareholder in Siemens Communications, it should take the principle responsibility for managing such matters in the division.
The company could only reveal that it is in negotiations regarding a broad-based black empowerment deal, which will be concluded by the end of the year.
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