Ailing Telkom faces bigger fine

Nov 25 2012 22:08
New Telkom chief executive Pinky Moholi. She is th

Outgoing Telkom CEO Pinky Moholi.

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Johannesburg - South Africa's competition watchdog is seeking to increase a R449m fine against fixed-line operator Telkom SA [JSE:TKG] for uncompetitive behaviour.

The Competition Tribunal, which rules on anti-trust complaints, in August fined Telkom R449m for using its dominant position to block competition from other network services providers.

That was well below the R3.5bn originally sought by the Competition Commission, the anti-trust watchdog, in its nearly decade-old complaint against Telkom.

Telkom is expected to file its appeal against the decision this week.

A spokesperson for the Competition Commission said on Friday it had already filed its own appeal.

"Part of the reason why the fine was lowered was because they found the commission hadn't made the case for price discrimination and excessive pricing," said Trudi Makhaya, an official at the commission.

"We would like that to be considered by the Competition Appeals Court. Obviously, if they do find that we were right on price discrimination and excessive pricing the fine would go up toward the R3.5bn that we had asked for in the beginning."

Telkom had said a R3.5bn fine would be "catastrophic" and jeopardise its business.

The company reported an 80% drop in first-half profit on Monday, after it set aside funds to pay the R449m penalty.

Telkom is struggling to turn itself around after a failed expansion into Nigeria and declining fixed-line usage. It has launched a costly mobile network that has yet to gain traction.

The government is currently debating nationalising the former state-run utility. The state owns just under 40% of the company, while the state-run pension fund holds just short of 11%.

Telkom's chief executive has said she will step down in the middle of next year, becoming the fifth CEO to leave the firm in about seven years.

Telkom shares are down 45% this year, compared with an 18% rise by the All-Share index.  

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telkom  |  price fixing  |  competition commission



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