Break Telkom’s stranglehold on telecoms
Internet Solutions CEO Angus MacRobert said Telkom should have its wholesale and retail divisions split, and its internet division should be made independent from the other operations so no cross-subsidises could occur.
Telkom has temporarily retreated from its plans to buy an information technology company after its early acquisition attempts were rebuffed. But Telkom CEO Papi Molotsane said it may try for smaller acquisitions or attempt a large takeover once its board had reassessed the options.
"Telkom’s anticompetitive behaviour is out of control, with no regulatory body being able to monitor its behaviour, and Telkom not recognising any legal or regulatory decisions," MacRobert said.
Far from being allowed to make any buys, it should be torn apart, he said.
MacRobert has already prepared arguments for why the Competition Commission should veto any move by Telkom to acquire an information technology (IT) company. Telkom has a monopoly over voice networks and high-speed ADSL internet lines, and should not be allowed to do anything to make it more difficult for others to compete in the market for data services, MacRobert said.
Internet Solutions has often clashed with Telkom, chiefly over the rates that internet service providers must pay to access its infrastructure, but Telkom offers internet services of its own in competition to private-sector players.
MacRobert said one example of anti-competitive behaviour was that Telkom’s retail division, not its wholesale division, fixed the fees that private internet players must pay for its bandwidth.
Despite opposition from the industry, Molotsane has recommitted Telkom to beefing up its IT skills so it can offer voice, data and video services to protect its long-term future.
But he conceded that an acquisition may not be the best way of broadening its services to generate fresh profit streams. Late last year it bid for Business Connexion, but its bid was rejected as too low. Then Molotsane spoke of making a bid for Dimension Data, provoking an instant snub from that company.
"Our first intention wasn’t successful so we have retreated to look at the best way forward," he said.
"We have to provide our clients with holistic IT solutions."
In the next few days Telkom will decide whether to build up its in-house skills, whether to buy a small IT company and grow it, or whether to work in partnership with large technology companies rather than try to take them over.
Telkom might still try to buy a large player, and would fight hard to win Competition Commission approval if it chose that route, he said.
"Before we approach anyone we have to have a solid business case so we are not going to be too dominant or make it too difficult for competitors to operate."
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