Big Telkom split considered: sources

Industry speculation suggests that Telkom is looking at a big split between its wholesale and retail divisions, which will see the divisions functioning as separate companies.

A functional separation of Telkom’s wholesale and retail businesses is already a requirement following a Competition Tribunal in July 2013.

To support this requirement, Telkom published a code of conduct document in January 2014 detailing how employees of its wholesale and retail businesses should engage with each other.

According to the 2014 Code of Conduct, the top policy is for Telkom wholesale to treat Telkom retail and other licensed operators in a non-discriminatory manner.

MyBroadband has received information that Telkom is now considering a full separation between the two business units.

Telkom spokesperson Jacqui O’Sullivan said the company has already put a range of actions in place to ensure the implementation of, and ongoing compliance to, the Settlement Agreement reached with the Competition Commission.

This agreement included the accounting separation (through transfer pricing) and functional separation (through the Code of Conduct) of Telkom’s wholesale and retail businesses.

In support of the separation of its retail and wholesale businesses, Telkom rolled out a competition law compliance programme across the company and also conducts independent compliance audits.

“These changes have been driven by the Telkom Transformation Office which was established specifically to lead this business transformation,” said O’Sullivan.

While O’Sullivan could not say much more because the company is in a closed period, she did add that they are “assessing the viability of other forms of separation to unlock further value for all our stakeholders”.

She added that the speculation is not surprising, considering the “extensive work undertaken by Telkom to secure the separation of its wholesale and retail business, along with the fact that wholesale and retail separation has been implemented in other markets around the world”.

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Big Telkom split considered: sources