MONEYWEB: It’s always an interesting dynamic when we do look at Telkom’s results. On one side you’ve got shareholders who, when they hear the numbers are going to be good, they are very happy about that. Then on the other hand, we have consumers who are not going to be so happy. How should a company like Telkom balance that?
WAYNE McCURRIE: Well, look, Telkom has got to over time deliver value to their customers because competition will come in. You know, if someone is making super-profits competition will come into the system – and we know that whole long story. And I see today, interestingly enough, that Telkom actually has cut the costs of the Internet, I think it’s their ADSL line, by about 22%, so they are cutting costs down. Now there have been 10 studies done, and half of them say Telkom is too high, and the other half say that Telkom is too low …
MONEYWEB: Most too high.
WAYNE McCURRIE: Yes, it depends on who is paying what consultant to come out with what result. But I think we as consumers can expect that Telkom will come down to norms, and whatever those norms are, who knows? So I think we will see a reduction. But Telkom can still generate fairly decent earnings per share, because they are doing it by restructuring and cutting costs. So I think overall it’s good news for the consumer in that costs will come down over time. I think it’s good news for the shareholders because I think they can still generate a decent return from this level. However it’s not good for the people being retrenched, because fundamentally that’s one of the ways they are doing it.
MONEYWEB: Khulekani, Wayne mentioned ADSL, which is what we know as broadband and the fact that Telkom had cut those prices. As we mentioned, it’s good news for consumers, but what about you as a shareholder, does that worry you or is that something you have been factoring in?
KHULEKANI DLAMINI: Can I just go back and make a point of correction on the dividend and special dividend. I propose my range, Wayne, is R4.50 to R7.50 for that special dividend. It’s not all the way up to R9 – both of them fly a very, very high dividend. And then coming back to what’s going to happen with ADSL, one would expect [indistinct] to come in obviously, you would expect volumes to actually push up as the pricing comes down. There have been studies that were done in terms of what in the Mexican market happened, when that happened bundled with facilitisation of access devices – PCs and laptops – and you got fantastic penetration of [indistinct] offering within that market. So I believe that you will have decent uptake to compensate for the decline in pricing.
