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Union calls for Telkom bosses' heads

Jul 01 2012 10:34 City Press

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Johannesburg - In the wake of the failure by telecoms firm Telkom [JSE:TKG] to sell a 20% stake to Korean group KT, the powerful Communication Workers Union (CWU) is baying for the heads of Telkom chief executive Nombulelo “Pinky” Moholi and her senior executives.

The union, which vehemently opposed the R3.3bn transaction, wanted Communications Minister Dina Pule to sack Moholi and her team for failing to turn around the fixed-line and mobile phone operator, which saw its yearly headline earnings drop 33% to R1.65bn and after-tax profit plummet 93% to R179m.

The deal was blocked by government, the majority shareholder, which balked at the price the Koreans were prepared to pay.

CWU spokesperson Matankana Mothapo said: “The current management is dismally failing to turn around Telkom and instead focuses on retrenching workers to create artificial profitability. This strategy has gutted Telkom to the bone.

“The union calls for the minister and Cabinet to review Telkom’s management with a view to getting a new, competent team that puts the perspective of building a democratic, anti-imperialist, developmental state at the front.”

The union is in favour of the state taking full ownership of Telkom, which it owned before it partially listed on the JSE in 2003 and sold a further 7.2% to BEE grouping Elephant Consortium in 2005.

Government currently holds nearly 40% of Telkom.

Mothapo said: “The crisis in Telkom is a perfect opportunity for government to take back this asset and use it to drive a developmental agenda such as rolling out broadband to schools, households, and government facilities.”

The company is in serious need of a massive capital injection after it burnt a lot of cash following a failed investment in Nigeria and rolled out its cellphone subsidiary 8ta, which is struggling to compete against entrenched rivals Vodacom Group [JSE:VOD], MTN Group [JSE:MTN] and Cell C.

To add salt to the wound, Telkom is facing a R4.5bn fine from the Competition Commission for anti-competitive behaviour.

The potential fine was in relation to a contravention that happened between 1999 and 2004.

Telkom also lost more than R10bn in four years because of the failed acquisition of Nigerian telecoms firm Multi-Links, which was eventually sold off for $10m (about R83m).

The Nigerian safari and the anti-competitive behaviour happened years before Moholi took over the reins at Telkom two years ago.

Sikhumbuzo Kholwane, chairperson of the Parliamentary portfolio committee on communications, said he could not understand why the union blamed the current Telkom management for the Multi-Links deal and Competition Commission’s potential fine.

He said government should clarify the role of Telkom and give the organisation a clear vision because it was unclear whether the company should play a developmental role.

“I am not saying Telkom management has not done anything wrong. I need to talk to the union to find out what their point of departure is,” said Kholwane.

Pule's spokesperson Siyabulela Qoza said the government would continue working with Telkom’s board in a quest to turn around the company’s fortunes.

 
telkom  |  nombulelo moholi  |  8ta
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