Telkom fine a slap on the wrist

2012-08-07 13:10

Johannesburg – Telkom [JSE:TKG] had to be fined something to make it politically equitable and for the Competition Tribunal not to be seen as unfair, a telecoms analyst said on Tuesday.

Dobek Pater, a telecoms analyst at consultancy Africa Analysis, was reacting on news that the Competition Tribunal has slapped a lighter-than-expected fine of R449m on fixed-line operator Telkom for using its dominant market position to “bully” potential competitors.

The result is likely to be seen as a victory for Telkom. The competition watchdog, which first lodged the complaint in 2004, originally sought a fine of R3.5bn, which the struggling company has said would be “catastrophic” and jeopardise its business.

Pater said the R449m fine “is probably an optimal way out for all parties”.

The Competition Tribunal, which rules on anti-trust complaints, said Telkom exploited its position as South Africa’s dominant player in telecoms to block competition from other network service providers.

“Telkom impeded the growth of its competitors and retarded innovation in the market place,” the Tribunal said, adding that “Telkom bullied its downstream competitors into line”.

Shares of Telkom, which were down more than 3% before the release of the judgment, pared losses after and were down 1.3% at R17.81 at 12:58.

Stung by declining fixed-line usage and an expensive, failed attempt at expansion into Nigeria, Telkom has been struggling to craft a convincing turnaround plan.

South Korea’s KT Corp last year offered to buy 20% of Telkom in a deal that was eventually scuppered by South Africa’s government after KT cut back its offer price.

The government has also said companies trying to maximise profits could overlook the millions of poor lacking services. Rolling out broadband services is one of the ruling African National Congress’ stated goals.

The government is currently debating making Telkom a fully state-owned company once again.

South Africa’s government currently owns just under 40% of Telkom, while the state-run Public Investment Corporation holds just short of 11%.

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  • JevonMarshallJohnson - 2012-08-07 13:37


      werner.coetzer.311 - 2012-08-07 13:43

      1 October

      JevonMarshallJohnson - 2012-08-07 14:15

      Yeah sure October 1......just like August 1 no?

  • 777productions - 2012-08-07 13:38


  • Christi Vaughn Roestorff - 2012-08-07 13:42

    I have my past accounts for at least the past 5 years, where can I apply for my refund?

  • tebo.go.5 - 2012-08-07 13:42

    my one question is that, if the consumer was ripped-off all these years and now telkom has been fined, WHO will receive this money? is it the consumer or the government? Ooooh, if my memory serves me ryt, the government own a large stake of Telkom, so isnt that sending money to yourself?

      jaysonpaul.beckwith - 2012-08-07 14:16

      My thought exactly.

  • abusufyaan.ahmad - 2012-08-07 13:48

    hope we get a rebate from the fine money or will it be corruptedly usurped

  • robqb - 2012-08-07 13:58

    What difference does the size of the fine make? It will eventually be filtered back to the consumer to pay. What options do the consumers have when there is no "competition"?

  • marnus.lamprecht - 2012-08-07 14:01

    The biggest problem with these kind of fines are that the people that was overcharged previously will have to pay more for the services for the company to have the money to pay this fine. The government is the only people that prosper cause they get extra money to steal. In years to come ESCOM will probably also be fined and then power tariffs will only increase further.

  • sedick.gydien - 2012-08-07 14:01

    This confirms that the Competition Tribunal is a joke.......

  • patrickflynn73 - 2012-08-07 14:14

    Seriously considering cancelling my Telkom account

  • elizabeth.bothma.58 - 2012-08-07 14:18

    As with the bread and petrol fine - why does the money not come back to us, the consumer. Afterall it is our money that is stolen and mis-managed?!

  • eric.martinsich - 2012-08-07 14:20

    Great. Now we can go forward. What did the public want? To collapse Telkom and place another 19,000 people out of work. If this is what is wanted then lets fine all the big companies major amounts of money when they screw up, collapse them and more people out of work. It was the private companies pushing to collapse Telkom so that they can make the big money. An Ex Telkom Employee

  • ken.grimblegrumble - 2012-08-07 16:03

    Basically because Government and PIC own 51% of Telkom they loss 200 bar but receive 400+bar. All other shareholder get screwed for the difference.

  • peter.estrange - 2012-08-08 08:45

    @tebo. In this age of recycling - what is wrong with that??? Telkom just increase their charges to get it back and Govt gets more to spend on parties for themselves.

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