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What the \'hell\' is Telkom up to?

By   |  August 24, 2004

There are many ways to look at the current Telkom scuffle and to be honest neither of them casts Telkom – or the South African government – in a favourable light. In fact between the two it is difficult to pick which is more to blame: government by allowing workers to be retrenched while Telkom senior executives walk off with hefty salaries and the company rakes in excessive profits. Or Telkom which appears to be more concerned with threatening a small website owners for speaking out against its actions, than in answering the really important questions of why it is that Telkom is one of the most expensive telecommunications providers in the world. And why the company feels justified raking off millions in profit, much of which is destined for foreign owners. In reality both Telkom and government are doing themselves and South Africa a great disservice.

For those unfamiliar with the Telkom saga, the current scuffle revolves around the South African monopoly telecommunications provider\’s plan to retrench more than 4000 workers over the next three years. This despite collecting a hefty R4,6billion profit last year and paying its CEO Sizwe Nxasana a R11million salary in the same period. At the same time the South African government, a 39 percent majority shareholder in Telkom, has acted all but oblivious to the plans of Telkom and it was only after a few weeks of publicity, union-inspired interdicts and media attention, that the communications minister finally spoke out in public on the issue. And even then only to say that she had asked for an explanation from Telkom but that the CEO was out of the country and couldn\’t answer until he returned.

While Telkom may not be answering the questions of government, or the public, one thing they are doing is spending a lot of time and effort on legally quashing a highly critical website ( which – thanks to Telkom\’s attention – has become something of a rallying point for the thousands or even millions of disgruntled Telkom clients.

As I said, there are many ways to look at this seemingly senseless morass. For a start, why is it that a telecommunications company which has a monopoly hold on the provision of services in South Africa and with government as a majority shareholder is able to make R4,6 billion profit in a year and at the same time justify retrenching 4000 workers? This on top of the close to 30000 staff the company has shed since 1999 and in a country where around 40 percent of the population is unemployed? Telkom operates in a uniquely privileged and powerful position. Even if the company thinks it has the right to shed these jobs, government equally has a right – and an obligation – to make sure there is no other alternative and that Telkom is acting within the best interests of the country. Government is not doing this. And I\’m yet to hear a justification from Telkom that makes me believe these actions are in the interest of the country.

It also calls into question exactly who is making the decisions at Telkom. Clearly it is not government which leads one to believe that it must be the foreign owners that are calling the shots and setting the tone for Telkom\’s apparent greed. It appears, from where I and many others sit, that this is a disturbing example of \”shareholder fundamentalism\” in which profit precedes all other considerations. This is not acceptable and Telkom must account fully for all its actions.

Secondly, the profits that Telkom are raking in is at the considerable expense of the South African public who still has no alternative service provider. In fact the likelihood of a second national operator looks further off today than it did a year or two ago. And in the interim consumers are destined to cough up more for a service which is inferior and more expensive than those in most other countries in the world. One recent report even suggests that of 14 developed nations surveyed, South Africa is the most expensive for telecommunications services. Which means that we\’re likely to be all the more poorer and less connected in the years to come. Unless of course government speeds up the process to install a second national operator.

A third issue that perturbs me is the energy Telkom is putting into closing down the small but highly critical website. Their priorities seem a little out of focus when one considers that the same time they are embroiled in a potentially much bigger scuffle with government, the media and an increasingly disgruntled public threatening revolt.

Last week I sat through an hour-long national radio debate on one of the larger radio stations in the country. During the debate members of the public, unions from the communications sector and business owners took it in turns to highlight each and every fault of Telkom and criticised the company for its arrogance and opportunism. Even the little old lady from a small rural town who thought Telkom offered a great service was indignant at the idea of a senior executive of the company taking home R11 million in payment for work supposedly done. It became immediately obvious that the image crises Telkom faces is more substantial than most would have predicted. And yet Telkom apparently turned down the invitation to participate in the debate. Presumably they were too occupied hunting down small scale website owners hostile to their operations to take the time to defend their actions in a national forum that all but crucified the company. Clearly someone at Telkom needs to re-evaluate the organisation\’s priorities.

It\’s time that Telkom had some competition. It is also time that government made its mind up about a second national operator and put to an end the hiatus that is allowing Telkom to profit from closed market while entrenching itself before the competition arrives.


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