Given the importance of telecommunications, it would be nice to think that our largest fixed-line provider Telkom would be in good shape, but the news flow has not been all positive, and yesterday’s results announcement was a worry for a few reasons.
1) It may well be that ZA Confidential’s invitation to the Telkom interim results presentation went astray, and I did receive a news release when the results were published. However, a query to the Telkom media office requesting details of the presentation went unanswered, so it is difficult to know what to make of it all. Certainly, I have always believed that it is wise to engage with the media and to be open and available to all. My absence from the presentation is an irritant, but will not stop ZA Confidential from commenting on Telkom.
2) The CFO of a large listed company is a key player in ensuring that the finances are prudently handled and that all the rules of good governance are respected. So what do we make of the latest revelation that Telkom lent R6m to buy shares to its CFO Jacques Schindehütte – while he was being investigated for (as-yet unexplained) misconduct. A former CEO of former Absa, Schindehütte had been seen as a safe pair of hands at Telkom, where management and Boards have been at one another’s throats, the dominate shareholder has been perceived to interfere unnecessarily, and the turnover of CEOs has been precipitous. The sooner this issue is resolved, hopefully with the CFO being exonerated, the better. The current suspicions and speculation are doing Telkom no good, even though it is a healthy sign that this issue has come to light at all.
3) Finally, I worry about Telkom Mobile, which at its launch was called 8ta, and then was bizarrely re-branded. Telkom owned a stake in an established cell phone operator Vodacom, which it sold, before launching 8ta into a fiercely competitive market, with a lot of talented and experienced rivals. A puzzling strategy. Now we see that Telkom is looking at “de-risking” its mobile division, whatever that means. Not the behaviour of a loving and happy parent.
With Vodacom planning to link up with Neotel, Telkom will be facing a far nimbler and even more dangerous rival – with an offering that would include fixed-line services. As the world moves towards the Netflix model of receiving TV and other data services on the ground and not from satellites, a communications revolution is underway in SA, and a lot will change if we can ever get affordable and speedy broadband to more people. Telkom has such massive assets, and does some things very well, so it will not disappear overnight, and we must all hope that the current cost-cutting and strategising of a very impressive CEO, and sound guidance from an experienced and business-savvy Chairman, will help it to define its true direction, and to learn from many recent mistakes. We will be watching.
Tweets of the Day:
Marl le bean (@Marlebean): I may not be the brightest crayon in the tool shed but at least I’m great at analogies.
Puns (@omgthatspunny): How does Moses make his tea ? Hebrews it.
comedybot (@comedybot): Women like silent men, they think they’re listening. -George Carlin ☺
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