Telkom mired in static

[rpm]

Telkom mired in static

Telkom investors are confused. When the telecommunications company issued its trading update at the end of last month, the surprise aspect was not the further R900-million loss it incurred to get mobile operator 8ta on to its feet, nor the write-off on yet another ill-conceived African venture. It was the warning from the telecommunications business that its data revenue had shrunk by about 6% over the six months to September.

 

[JerryMungo]

Telkom mired in static

Telkom investors are confused. When the telecommunications company issued its trading update at the end of last month, the surprise aspect was not the further R900-million loss it incurred to get mobile operator 8ta on to its feet, nor the write-off on yet another ill-conceived African venture. It was the warning from the telecommunications business that its data revenue had shrunk by about 6% over the six months to September.

Seems investors haven't had their ear to the ground. That's what happens when you hand out shares for the sake of a quick buck to the masses. BEE is failing them. The country goes backwards without competition, but Telkom goes backwards with competition (surprise surprise). The only hope is for fresh ideas to turn Telkom into a sleek competitor, get rid of the dead wood and take on a totally new direction. Time to get the post office out of Telkom. Not sure if it's possible as long as government own the majority stake.

 

[krycor]

Like i said, best way for gov to ensure service deliver, push LLU and pull out of Telkom to a degree is to split Telkom into a infrastructure type company and a service company. That way the service one can compete with new entrants unhinged by LL costs etc and gov ensures service delivery better too, heck get other telecoms companies to buy a stake in the new company too..

 

[stricken]

Wowee. They F***K over their client base for more than a decade, treat them like S**T, and now they all scratch their heads and wonder why its all going down the toilet. Amateurs. Bloody Amateurs.

 

[system32]

Jean Pierre Verster

The expectation had been that the steep cuts in the price of mobile broadband would increase competition between the mobile operators. From Telkom’s announcement, it seems that the biggest shift has been mobile broadband gaining significant market share at the expense of Telkom

Are you saying that Telkom did not realise that Mobile Internet would dent ADSL.
Sounds like when Telkom did not realise that Mobile Cell would dent POTS.
What kind of analysis does Telkom employ?

Just imagine, if Telkom had invested the wasted R10 billion + R500m + R450m=R10.95B in local ADSL/8ta!

 

[MickeyD]

It's a pity that the KT Corp 20% buyout bid is not for a portion of the 38% government share! This would dissolve government's influence on the Telkom Board of Directors.

IMO the Telkom Board is to blame for the last 10 years of mistakes. They are 100% responsible for any major decision made and have failed miserably.

For the first time since Sizwe Nxasane left something positive is happening and it is due to some of the old guard being given proper direction under Pinky Moholi's leadership.

 

[zamicro]

A very good article.

It's a pity that the KT Corp 20% buyout bid is not for a portion of the 38% government share! This would dissolve government's influence on the Telkom Board of Directors.

IMO the Telkom Board is to blame for the last 10 years of mistakes. They are 100% responsible for any major decision made and have failed miserably.

For the first time since Sizwe Nxasane left something positive is happening and it is due to some of the old guard being given proper direction under Pinky Moholi's leadership.

If only we can get the shares of government diluted so that the executive can actually make the decisions.

I have a feeling that Telkom will become a lot more competitive in the near future. A pity that it takes so long to turn around a huge ocean liner (Hey Jannie )

 

[w1z4rd]

If their ADSL was more cost effective it would not have lost to mobile broadband.

 

[Tomtomtom]

The important factors for me are (1) that gov't no longer holds special voting rights and (2) that the board brought as close to a proper manager as we could expect.

I agree that Telkom needs to solidify its wireline wholesale position and not try to diversify into value-added nonsense like content. They should back off the retail aspects.

They should position TelkomInternet as a completely separate brand like 8ta and leave it at that. No more brands. Get 8ta profitable and sell it.

It's worrying that they don't seem to want to acknowledge their huge advantage in wired data. It's as if Telkom has fooled itself into thinking wireless is a better bet without realizing it's that way precisely because Telkom has historically done such a bad job of making wires productive!

 

[IdlePhaedrus]

If Telkom dropped it's ADSL line rental charge, let everyone get the best speed from their exchange that they could get and provided the necessary bandwidth to the exchanges, imagine how ADSL in South Africa would change, and how many people would probably take it on over mobile broadband. I wouldn't be surprised if that figure stands somewhere in the millions.

To date Telkom has focussed on getting lots of money from a few people. Wouldn't it be great if they focussed on getting a little bit of money from LOTS of people? That way their turnover and profit will remain about the same, but huge amounts of people would benefit and they would be growing their own infrastructure and ensuring their place in the market on an ongoing basis.

To my mind it is a no brainer.

I quite like Pinky, she is a breath of fresh air given her predecessors. However, I think she is climbing a government hill with a stone ball on her back, and tomorrow it is just going to roll back down the hill.

 

[bekdik]

I doubt that their largest investor is confused ...

 

[IdlePhaedrus]

I doubt that their largest investor is confused ...

Of course they aren't confused; the ANC government wants to make the most amount of money for the least amount of work.

It is why I don't vote for them.

 

[Tomtomtom]

Of course they aren't confused; the ANC government wants to make the most amount of money for the least amount of work.

And you're called IdlePhaedrus.

I also want to make the most amount of money from the least amount of work. I don't think that's where the ANC goes wrong. Where they go wrong is that they don't actually make any money regardless of how much they work.

 

[MickeyD]

I also want to make the most amount of money from the least amount of work. I don't think that's where the ANC goes wrong. Where they go wrong is that they don't actually make any money regardless of how much they work.

It's a case of them not understanding that providing universal service is not a good business decision, rather a social responsibility. That stretches Telkom's resources (funding as well as those that actually do work), which in turns retards their growth.

 

[IdlePhaedrus]

And you're called IdlePhaedrus.

I also want to make the most amount of money from the least amount of work. I don't think that's where the ANC goes wrong. Where they go wrong is that they don't actually make any money regardless of how much they work.

LOL, I forgot to mention that as government their policy should not be to make the most amount of money for the least amount of work, but to 'make the country work', which is a slightly more onerous task.

Also either way you look at it, if you are 'smart' then you can do less work to achieve the same goals.

The government appears to lack the smarts and the will to make the country work. It is a worry.

And if some of that loot falls into the back pocket, so much the better it seems. It pays for the Blue Label after all.

 

[Tomtomtom]

It's a case of them not understanding that providing universal service is not a good business decision, rather a social responsibility.

Social responsibility is not an end unto itself. In fact it's more often than not an escape clause from reality.

Because even social programmes must translate into economic benefit ultimately, if they are to be of any value. Universal education must improve the productivity of future generations; universal health must improve the productivity of today's workforce, etc.

The ANC's problem is that it doesn't invest in productive enterprise, regardless of the type. If we allow them to claim unprofitable investment is the nature of their "social responsibility", then we are just offering them an excuse to fail.

 

[IdlePhaedrus]

Actually, the article header shouldn't read "Telkom mired in static", it should read "Telkom mired in government". That would be more appropriate.

 

[IdlePhaedrus]

Social responsibility is not an end unto itself. In fact it's more often than not an escape clause from reality.

Because even social programmes must translate into economic benefit ultimately, if they are to be of any value. Universal education must improve the productivity of future generations; universal health must improve the productivity of today's workforce, etc.

The ANC's problem is that it doesn't invest in productive enterprise, regardless of the type. If we allow them to claim unprofitable investment is the nature of their "social responsibility", then we are just offering them an excuse to fail.

Agreed, in this case Social Responsibility is not the issue. For me it is improving the infrastructure of the country to serve a particular need.

It has been said that broadband penetration has a direct correlation with growth. I am not going to argue the accuracy of that statement here, or whether it applies to the same extent in 'emerging economies' but it seems pretty plausible.

So, going back to my original argument, if Telkom made the same amount of money by serving LOTS of people for a small amount of money, rather than a small number of people for LOTS of money, all of us would be better off. Nes pas?

 

[MickeyD]

Agreed, in this case Social Responsibility is not the issue. For me it is improving the infrastructure of the country to serve a particular need.

It has been said that broadband penetration has a direct correlation with growth. I am not going to argue the accuracy of that statement here, or whether it applies to the same extent in 'emerging economies' but it seems pretty plausible.

So, going back to my original argument, if Telkom made the same amount of money by serving LOTS of people for a small amount of money, rather than a small number of people for LOTS of money, all of us would be better off. Nes pas?

If it was your business would you invest R(Billions) in rural/deep rural areas with absolutely no chance of a return? I think not.

EDIT: referring to post-licence obligation period.

 

[IdlePhaedrus]

As I said, I don't think this is a social responsibility issue. And if there are social responsibility requirements then a good strategy is required to support it.

Let me give a concrete example of what I am trying to say from a commercial perspective. In 1995 when I was a young geek (now I am an old geek ), Microsoft released Windows 95. It was an order of magnitude less expensive than any other commercial operating system on the market, and it was 'pretty'. I admit to standing in line outside a software shop in Cape Town early in the morning to get my copy.

That strategy shot Microsoft to being the premier desktop operating system provider world wide (whether you like it or not).

Admittedly things have changed since then, but at that time offering an inexpensive solution to a complex situation basically won over the world. They were making lots of money by selling their software to lots of people for a small price, rather than selling it to a few people for lots of money.

It was a good strategy, it was based purely on economics, and it worked. There is absolutely no reason why it shouldn't work for Telkom either given the potential out there, and I think there is a lot.