We should be Telkom’s guiding light: DoC
The Department of Communications (DoC) – which currently has strong control over Telkom through its 39.8% government share in Telkom, along with the government owned Public Investment Corp (PIC) share – is not keen to lose its “golden share” rights.
The South African government’s “golden share” in Telkom (given to them before Telkom listed on the JSE in 2003) gives it the right to appoint five board members and the company chairman and CEO. This privilege will expire in early March.
However, Communications Minister Roy Padayachie said that while he accepts that their golden share in Telkom will expire, they would like to still maintain some ‘specific rights’.
The JSE previously indicated that they will fight any attempt of Government to try to maintain its golden shares, and Padayachie is quoted in Rapport as saying that they are negotiating with the JSE and Telkom’s minority shareholders, focusing on Telkom’s statutes. According to the Sunday newspaper, the DoC is keen to change Telkom’s statutes.
The JSE will have to support such a change, and Padayachie would also not indicate what changes the DoC is looking for.
Government’s shareholding in Telkom and their control over the company has been widely seen as detrimental – not only to Telkom but also to South Africa’s economy as a whole. The DoC’s previous ‘managed liberalisation’ policies essentially protected Telkom’s monopoly, stifling competition resulting in very high fixed line rates.
Padayachie says that the DoC’s role in Telkom should be seen as positive. He told Rapport that business at Telkom went backwards because “government could not give the company strategic direction.”
According to Padayachie, Telkom can be saved, and it looks likely that government control is what Padayachie perceives to be the best route to resolve the telecoms provider’s problems.
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