Telkom to fight LLU, save Telkom Mobile: report

Telkom is gearing up to fight against local loop unbundling (LLU), while also trying to save its loss-making mobile business, Telkom Mobile

By - September 29, 2013
Telkom fixed line

Telkom is gearing up to fight against local loop unbundling (LLU), while also trying to save its loss-making mobile business, Telkom Mobile.

This is according to a report by the Sunday Times of the events at Telkom’s Annual General Meeting (AGM) on Friday (27 September).

Despite brief drama involving the re-election of former Telkom chairman Jeff Molobela, the AGM reportedly passed with little controversy.

According to the Sunday Times, Telkom’s board won over shareholders with last minute changes made to its resolutions – which were published on Thursday, a day before the meeting.

The new resolutions included, amongst others, the authority to purchase back a maximum of 10% of Telkom shares if needs be, as well as the authority to provide financial support to Telkom employees – both in order to implement an employee reward share scheme.

These changes were made to ensure “greater alignment between shareholders, the board and management”, according to Telkom chairman Jabu Mabuza.

However, Telkom still faces challenges on two fronts, according to the report.

Firstly, CEO Sipho Maseko is preparing to fight local-loop unbundling (opening up the “last mile” of the network that links customers to their nearest exchange) – which the CEO reportedly views as giving competitors a “free ride” on investments made by Telkom.

Secondly, Maseko is looking at ways to stop Telkom Mobile from sinking, accoring to the report.

Telkom Mobile made a loss of R1.7 billion in the last financial year, and currently has only 1.5 million subscribers – a tiny percentage compared to other mobile operators in South Africa.

Maseko plans to “de-risk” the company and limit the “intensity of what it costs [Telkom]” to run it. However no firm strategy to do so has been decided.

Plans would be announced in November.

Not completely drama free

Despite smooth sailing compared to last year’s AGM, where then-minister of communications, Dina Pule, ploughed into the workings of the company and made significant changes, this year’s AGM wasn’t without a bit of drama.

Former Telkom chairman, Jeff Molobela made himself unavailable for re-election to the board after fellow board members “diplomatically” asked shareholders not to re-elect him.

Further, shareholders also called out the executive remuneration which did not match the performance of the company, the report said.

Non-executive directors elected to not take an increase for the coming year, in order to contain costs.

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