Why Papi quit Telkom

[ShaunSA]

http://www.mg.co.za/articlePage.aspx?articleid=304532&area=/insight/insight__economy__business/

 

[rpm]

Telkom’s monopoly pricing powers centre on its ability to control the SAT-3 undersea cable. It uses only a fraction of this cable’s capacity, keeping broadband prices high and starving the country of an important resource.

I guess they will be fighting to maintain that monopoly even through the agreement expires soon.

 

[Spamtheman]

As is generally known, government has a considerable stake in Telkom, owning 37,7% of the fixed-line operator. Less known, and confirmed by Who Owns Whom in South Africa, the Public Investment Corporation, which manages the pension funds of state employees, owns 14,4%, giving the state overall control in excess of 50%.

This was by far the most interesting piece of the whole article. If in fact the government owns more than 50% of Telkom then I would suggest that the DoC has absolutely no excuse for letting the current situation of high pricing continue. There is in fact no need for legislation to control pricing (although that would be first prize) they can simply mandate that the CEO implement whatever policies they choose or face dismissal.

 

[Sneeky]

cause he's a quitter

 

[Sneeky]

This was by far the most interesting piece of the whole article. If in fact the government owns more than 50% of Telkom then I would suggest that the DoC has absolutely no excuse for letting the current situation of high pricing continue. There is in fact no need for legislation to control pricing (although that would be first prize) they can simply mandate that the CEO implement whatever policies they choose or face dismissal.

This is indeed fact and well known, however the government cannot be seen to interfere with a so called private company doing business to comply to their policy which inturn hurts profits. This will create negative sentiment amongst investors and could well scare off future investments in this country, especially those that the government has a vested interest in.
The company, Telkom, first and foremost goal is to satisfy investors needs, everything else comes in a distant second place.
They have done this well but are now facing many obstacles, one being government policy.
The governments mandate should be one of creating an environment where effective competition can thrive in this market which would inturn naturally bring down prices which is what they want. Telkom and the law though are very adept at stalling any moves to do so and the DoC and ICASA seem to make more mistakes and reviews than anything else. They just bumble along aimlessly
Investors are in it for the long term, which is probably why the Telkom stock showed gains when Papi decided to call a time out. They had no confidence in him going forward.
He lacked vision and the company effectively was not doing anything differently under his reign and with the market and telecoms technology rapidly changing Telkom still seem to move at their own lethargic pace.
Papi's inability to put Telkom on a new course didnt bode well for investors in the long term.

 

[GavinMannion]

Yeah but if the government starts forcing policies on "private" companies the investors will start running. Bad idea..

As long as it is taking they are going about it the right way IMHO..... licence more competition and de-regulate the industry.

Obviously they could do a lot more but I don't want to see them forcing their point of view on private companies.

[edit] damit Sneeky snuck in before me

 

[BandwidthAddict]

The government can do something to help the industry and shore up investor confidence, it can get out of Dodge. By this, I mean it can divest itself of all shareholding in Telkom, and NeoTel, and remove any regulatory restrictions on NeoTel.

It can also drop InfraCo and allow NeoTel to manage those assets as per the original agreement.

But it hasn't, and we all know the reasons for that; nothing to do with tsunamis

 

[Sneeky]

Yup, that is the other edge of the sword, 'managed liberalisation' purposely done at the ANC's own decrepit pace in order to protect their own investments while they create new competition with whom they also heavily invested in. (Neotel, Sentech, Infraco)
Old investments loss is their new investments gain.

 

[DragonLogos]

Well debating why Telkom should have even been allowed to list in the first place is another story, they did not need the funds and they should have only allowed to do so when competition was in place

I think the ' Investors ' know full well that they have been milking a market that should have not been sucked dry, and to carry on doing so it will likewise scare investors off. Talking of which, who are these creatures that that must be looked after? And as for the company its self, I have the feeling that they do not care a Tinkers Cuss for anyone, let alone stock holders, unless that is the stock options that they might have, which basically sums up your corporate performance carrot

I had a good laugh about this many years ago, when I was a fly on the wall at a (large) company, that I owned a bit of stock in... anyway there was this boss telling this employee the age old line, do you know who is the most important person to this business.... it is the shareholders - Thing is when you are a shareholder you see the other side of the spin, same when you are a lender from a bank, and then a depositor... you then get to see how you get told stories, which if you have any sense you should challenge and even shop around, its like shopping, you go to places that suit you, which is why monopolies are such a pain because they only give you two choices, take it or leave it

Anyway, your investors have had fair warning now, the game is coming to an end... mind you if you do you sums about 60 - 70 % of Telkom is still Government linked, so again who are these investors that need to be looked after

 

[Gatecrasher]

Yeah but if the government starts forcing policies on "private" companies the investors will start running. Bad idea..

Telkom is a public company, not a private one.

Government and the PIC own over 50% of it. They can do whatever they want with Telkom. They have a controlling interest in it.

If other Telkom shareholders are concerned, they have the right to sell their shares.

Personally, I would prefer affordable telecomunications forced on all South Africans, rather than pandering to the so-called "investors" who feel no shame in their part of the monopolistic extortion that has been perpertrated by Telkom over the years.

 

[froggytoo]

I stated long time ago Papi is a fraud and an windbag. Seems to me the though had some truth. So much for his stolen customer centricity idea. It failed miserably.

 

[sabagamma]

Telkom uses only a fraction of SAT-3!!! Telkom, when NeoTel comes on board you're gonna be fooked.