Telkom and the Multi-Links disaster

Telkom should not have sold off Telkom Media and given us all IPTV. Triple play. That's how you diversify.
 
How much money can Telkom lose before they go pop? How much, in Billion, are they worth?
 
They could not survive in a competitive environment. Shock?
 
It's extraordinary how analysts can sometimes be even more stupid than the companies they are analysing. Frost & Sullivan's market forecasts are usually quite good, but they seem not to understand what really makes a company a success or failure.

Frankly, as statement like, "Telkom invested in a CDMA (Code Division Multiple Access) network, that doesn’t have much of a future in Africa", is a cop-out. There's no basis to blame the technology for the failure of the company. Using that logic, Verizon, which has long been the leading mobile network in the US (CDMA, currently upgrading to LTE) should have gone bust years ago. Ditto China Telecom, which crossed the 100 million mark to become the largest CDMA operator in the world in March 2011, growing at an unprecedented rate. So, it's not the technology, it's the management, or, if they want to shift the blame slightly, a poor investment decision, given the company's track record.

I'd suggest that, before making stupid statements, these guys actually analyse the market and the investor (Telkom) properly. The CDMA market in Nigeria was created as a second-tier, originally fixed-wireless market, which opened up the formerly fixed line market in Nigeria, some years after the mobile market opened up. It was some time before these players convinced the NCC to allow them to operate fully mobile networks, creating converged licences, as we see today in South Africa as well. The players in this market paid a tiny fraction of what the much larger GSM players paid for their licences, and have played an important role in creating competition and growing both voice and Internet in Nigeria. Today, the most successful of these players in StarComms, which is the fourth largest player overall in Nigeria. Here's a quote from their most recent results: "Highlights include: continued strong broadband data growth, achievement of 20% EBITDA margin". Much of the leadership that's got it to this position comes from South African Paul Edwards, former Group CEO of MTN. It should be a wake-up call to South Africans that this highly competitive market is creating a situation where Nigeria has nearly 50 million Internet users (half the population) against South Africa's 5 million (10% of the population), partly because of the CDMA operators.

All of this means that the failure of Multilinks is its own fault, and, more specifically, Telkom's fault. Just admit it. They went into one of the highest growth markets in Africa, with a competitive technology, and a cheap licence, and stuffed up.
 
Qwikslver said:
Telkom should not have sold off Telkom Media and given us all IPTV. Triple play. That's how you diversify.
Click to expand...

Don't agree. Telkom Media is yet another one of the things Telkom misjudged badly. It was pathetic to see the panic when the guys at Telkom Media discovered that Telkom's broadband network was incapable of delivering IPTV, and they'd have to be just another satellite me-too player. Watch this space for what happens to 8ta...
 
ads said:
It's extraordinary how analysts can sometimes be even more stupid than the companies they are analysing. Frost & Sullivan's market forecasts are usually quite good, but they seem not to understand what really makes a company a success or failure.

Frankly, as statement like, "Telkom invested in a CDMA (Code Division Multiple Access) network, that doesn’t have much of a future in Africa", is a cop-out. There's no basis to blame the technology for the failure of the company. Using that logic, Verizon, which has long been the leading mobile network in the US (CDMA, currently upgrading to LTE) should have gone bust years ago. Ditto China Telecom, which crossed the 100 million mark to become the largest CDMA operator in the world in March 2011, growing at an unprecedented rate. So, it's not the technology, it's the management, or, if they want to shift the blame slightly, a poor investment decision, given the company's track record.

I'd suggest that, before making stupid statements, these guys actually analyse the market and the investor (Telkom) properly. The CDMA market in Nigeria was created as a second-tier, originally fixed-wireless market, which opened up the formerly fixed line market in Nigeria, some years after the mobile market opened up. It was some time before these players convinced the NCC to allow them to operate fully mobile networks, creating converged licences, as we see today in South Africa as well. The players in this market paid a tiny fraction of what the much larger GSM players paid for their licences, and have played an important role in creating competition and growing both voice and Internet in Nigeria. Today, the most successful of these players in StarComms, which is the fourth largest player overall in Nigeria. Here's a quote from their most recent results: "Highlights include: continued strong broadband data growth, achievement of 20% EBITDA margin". Much of the leadership that's got it to this position comes from South African Paul Edwards, former Group CEO of MTN. It should be a wake-up call to South Africans that this highly competitive market is creating a situation where Nigeria has nearly 50 million Internet users (half the population) against South Africa's 5 million (10% of the population), partly because of the CDMA operators.

All of this means that the failure of Multilinks is its own fault, and, more specifically, Telkom's fault. Just admit it. They went into one of the highest growth markets in Africa, with a competitive technology, and a cheap licence, and stuffed up.
Click to expand...
Correct. The initial investment was not in the retail space but in the wholesale arena - fibre backhaul. The second decision to enter the highly competitive retail market was the mistake, which they are now trying to back out of, while remaining in the wholesale sector. Note that they are not selling the entire ML company.
 
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