South Africa’s Telkom is considering options for its struggling mobile unit and is in talks with some parties about it, CEO Sipho Maseko was quoted as saying.
In a briefing following the release of the company’s first-half results, Maseko attributed…
South Africa’s Telkom is considering options for its struggling mobile unit and is in talks with some parties about it, CEO Sipho Maseko was quoted as saying.
In a briefing following the release of the company’s first-half results, Maseko attributed most of the unit’s difficulties to the fact that it was “late to the market” but added that Telkom will always need a mobile business.
Telkom, which is the smallest of South Africa’s four mobile operators, reportedly held talks with rival Cell C about consolidation opportunities a few months ago.
Alan Knott-Craig, the CEO of Cell C, said in June that consolidation is “one way to solve a lot of problems” in the South African mobile market.
Knott-Craig did not provide further details about the merger talks but added that with “120% saturation”, the only way smaller operators can attract new customers is by taking them “from the larger networks and the only way they do that is by bringing prices down”.
It is however very difficult for Cell C and Telkom to achieve sustainability, said Knott-Craig, who called for regulatory changes to support the third and fourth-largest players respectively.
Loan to CFO
Separately, Telkom recently suspended its CFO, Jacques Schindehutte, pending a disciplinary process. The South African operator clarified that allegations against him relate to personal misconduct rather than insider trading allegations.
“There is no connection whatsoever between the suspension of Mr Schindehutte and the insider trading enquiry instituted by the [Johannesburg Stock Exchange] in relation to Mr Schindehutte’s trade in Telkom shares on 30 September 2013,” it said.
Telkom disclosed in its interim results today that it provided a R6m (US$592,800) loan to Schindehutte to help him acquire shares in the company on an interest-free basis.
“Telkom’s management has recognised that the loan made to such executive may not have been in compliance with the provisions of the companies act and will, as a matter of urgency, take the matter under advisement from its advisers for rectification and/or recovery of the amount, should that be necessary,” it said.
Telkom, which provides fixed, mobile and internet services, is 39.8%-owned by the South African government, while 10.5% is held by the Public Investment Corporation and 5.4% by local investment firm Allan Gray. Approximately 42.3% of the company is in free float.
For the six months to 30 September, its operating revenue was up 0.3% to R16.2bn (US$1.6bn), while its debt decreased 34.9% to R4.3bn (US$424.6m).
