South African government officials will discuss Department of Communications-developed options for the struggling Telkom SA at its upcoming leadership election and policy conference.
The department has prepared the three options at the request of…
South African government officials will discuss Department of Communications-developed options for the struggling Telkom SA at its upcoming leadership election and policy conference.
The department has prepared the three options at the request of Cabinet, which rejected the proposed sale of a 20% stake in the telco to South Korean operator KT Corp for US$345m earlier this year.
Delegates at ruling party the African National Congress’ (ANC’s) conference, set to begin in Manguang next week, could take a decision on the future of Telkom – considered an important strategic asset – a communications department spokesperson told TelecomFinance. Officials will also discuss wider telecommunications policy.
While the government has not publically disclosed what the options are, local media reports state they include proposals for reviving the fixed-line and mobile operator.
The spokesperson declined to comment on earlier media reports stating the government is considering re-nationalising and de-listing the company.
However, he stressed that the company is an important state asset, noting that it plays a key role in national broadband rollout plans.
Meanwhile, communications minister Dina Pule told South Africa’s Business Day newspaper recently that her department is “fine” with Telkom remaining a listed company, although its business plan needs to be improved.
Pule noted that the department’s current options for Telkom may change as a result of decisions taken at the conference, although she will not alter her view that the company is key to helping the government meet infrastructure targets.
While decisions taken at the conference may take years to implement, the communications department spokesperson said they will help to determine the future strategies of Telkom and the wider telecoms sector.
Earlier South African media reports have stated the government may also consider merging Telkom’s mobile unit 8ta with rival Cell C and/or merging Broadband Infraco and Sentech’s broadband infrastructure into Telkom.
Telkom reported group profit for the six months ended 30 September of R547m (US$62m) – down 48.9% from the previous reporting period.
Commenting on the results at the time of their release, CEO Nombulelo Moholi, who recently resigned from the position, said the company has reached a “pivotal crossroads” from a strategic perspective and is engaged in “constructive dialogue” with key stakeholders to determine the way forward.
“While we anticipate government providing a clear understanding of its strategic direction, we remain focused on achieving our current business strategy,” she said.
The government of South Africa has a 39.76% direct stake in Telkom, while government fund PIC has a 10.61% stake.
