Reports of Telkom's death exaggerated

11 October 2015 - 02:00 By Ron Derby

There have been one too many Telkom obituaries written. And I will be first to admit that I have penned a few, listing the many corporate governance faux pas as evidence of a corporation going nowhere fast and failing to take advantage of its inherited infrastructure advantage. In the 12 years that Telkom has been listed on the local bourse, the CEO's chair has changed owners six times, and let's not mention how many board changes there have been.There's not much institutional knowledge from the time Sizwe Nxasana listed the now Centurion-based company.For the longest time, Telkom could be lumped together with the other state-owned enterprises, most of which provide enough inspiration for a textbook on poor governance.story_article_left1An institution destroyed by the meddling of its biggest shareholder, represented by the Department of Communications. A ministry that itself has seen six ministers since 2009, basically one for each year.Before then, the late Ivy Matsepe-Casaburri served for a decade.One can only imagine the mixed messages received at Telkom headquarters over that time. If not for the fact that the company is now listed and exposed to the "nefarious" markets, I am pretty sure that it would still be driven by muddled messages from the Union Buildings and Luthuli House.From its September 2007 peak, Telkom's stock dropped almost 90% to its lowest level in May 2013, about a year after the government rejected an offer for a 20% stake in the company from Korean operator KT Corporation.From that low point, the share has confounded critics, myself included, rising almost sixfold. Earlier in the year, it flirted with its 2007 all-time high.The ingredients for the surge were a new chairman along with a board that wasn't imposed by some distant political principal, and a blank canvas to re-create the company and keep it relevant in an ever-changing technological age.Reining in costs was the first and most important step. As we speak, Telkom - which had about 60000 employees in the late '90s - looks set to have fewer than 10,000 by the middle of next year. How SAA chiefs, the good ones in years past, would have loved to be allowed the room to do the same.Now, Telkom is in the position that even if its revenue doesn't budge an inch over the next year, the job cuts alone will place it in another league.story_article_right2Now the company can dream, hence the reported bid on the way for the floundering No3 mobile operator, Cell C. If the price is right, given the mobile operator's debt levels, there'll be a bid on the table.While Cell C's subscription numbers are said to be close to 20million, in truth it's the six or so million subscribers who actually spend on the network that Telkom wants.A Cell C deal would give Telkom scale and it would suddenly become a much bigger boy in the local telecoms space. One can easily see the very real possibility of the Sipho Maseko-led company going from being the hunted to gunning for one of the big two.And most vulnerable is MTN's South African operation; that's especially the case if Vodacom manages to complete its Neotel deal.It would prove quite an amazing turnaround story, one which I humbly admit to being sold on.But before one can even imagine that, they still need to improve the customer interface. Waiting in a queue for almost an hour to port to its mobile unit reminded me of being in a post office line with my mother in the late '80s. Just saying ...derbyr@sundaytimes.co.za..

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