5 big blunders from Telkom

Telkom remains the dominant player in South Africa’s fixed-line market, but along the way the company made some serious blunders.

By - March 7, 2016 Share on LinkedIn
Telkom fixed line

Telkom remains the dominant fixed-line telecommunications player in South Africa, with over 3 million fixed voice subscribers and a million ADSL customers.

Telkom also has the most extensive fibre network in South Africa, with over 149,000km of fibre around the country.

Telkom had many successes over the last few decades, but it also made some very costly mistakes along the way.

Here are some of Telkom’s biggest blunders in recent years, which include poor investments and questionable decisions.


Telkom going into Nigeria through Multi-Links, losing billions of rand

Multi-Links

Telkom purchased 75% of Nigeria’s Multi-Links for $280 million in March 2007 as part of its African expansion strategy.

Two years later, the company bought the remaining 25% of Multi-Links for $125 million – an investment which many people questioned.

Multi-Links bled money for years, but Telkom continued to fund the project without any great upside.

In 2011, Telkom sold Multi-Links, after its failed Nigerian expansion cost the company over R7 billion.

Former Telkom CEO Nombulelo “Pinky” Moholi said in 2012 that the company made mistakes in its investments in Africa, calling its Nigerian losses embarrassing.


Telkom selling its share in Vodacom, which gave it billions of rand each year in profits

Vodacom logo

Telkom was the majority shareholder in Vodacom after the company was founded in the early nineties.

Vodacom showed excellent growth in the 90s and 2000s, bolstering Telkom’s coffers with record profits.

Telkom had the option to buy Venfin’s 15% stake in Vodacom in 2005 to own a majority of the company. However, it lost out and Vodafone grabbed the share.

The 50/50 partnership did not work well, and in the end Telkom decided to sell its 50% stake in Vodacom.

Telkom chief strategy officer Miriam Altman said in 2013 that selling its 50% stake in Vodacom was one of the company’s biggest mistakes.


Telkom Media

Telkom TV

Telkom formed Telkom Media in August 2006, and received a pay-TV licence from Icasa in September 2007.

The company said it would invest R7 billion in the new media venture, and planned to offer a range of entertainment services.

In March 2008, Telkom said it would reduce its funding by R2.2 billion, but then decided to sell the company.

Telkom sold its 75% interest in Telkom Media to Shenzhen Media South Africa for a “nominal amount” in May 2009.


Telkom struggling to keep a long-term leader, with 5 CEOs in 10 years

Telkom logo on blue

Over the last decade, Telkom had many CEOs, which started after Sizwe Nxasana left the company in 2005 [Read: Telkom’s leadership struggles].

Nxasana was succeeded by Papi Molotsane, who acted as Telkom CEO from September 2005 until April 2007.

The Telkom veteran Reuben September took over from Molotsane, and he led the company until 2010.

Former Cell C CEO Jeffrey Hedberg was named acting Group CEO to replace September, but he did not last long.

In less than a year he was replaced with Pinky Moholi. However, she also did not stay for too long, and resigned from the company less than two years after starting as CEO.

Moholi was replaced by Sipho Maseko, who is currently CEO at the company.


Telkom waited a long time before offering uncapped ADSL products after MWEB launched its uncapped services

Telkom logo

MWEB launched South Africa’s first affordable uncapped ADSL products in March 2010, but it was not until September 2011 that Telkom launched its uncapped ADSL packages.

The long delay in responding to MWEB’s uncapped ADSL products resulted in lost ground in the uncapped broadband market.


More on Telkom

Here is who qualifies for Telkom’s free ADSL-to-FTTH trial

Massive Telkom fibre-to-the-home roll-out begins

The story behind higher Telkom ADSL sync speeds

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