Telkom prices hold SA back — Reuters
The statement from Glocer, in an interview during a brief stop in SA, will add to the pressure on government to inject new energy into sluggish efforts to promote telecommunications competition to avoid missing out on foreign investment.
This also underlines recent research from economist and telecoms consultant Paul Cole, which showed that local consumers were paying 440 times more than they should for voice and data calls.
Glocer said that while Reuters had extensive business interests in Africa and was attracted to SA’s sophisticated financial markets, telecoms services “are far more expensive here, and the available bandwidth is flaky”.
Glocer said if this issue was addressed, it would precipitate far greater investment from Reuters in SA. He said the high cost of telecommunications was an issue that “has to be solved if SA wants to create an economy that is growing”.
Reuters does not disclose separate investment details of its South African business, but it employs about 100 people in SA and last year experienced 15% growth in revenue across Africa.
Glocer said that while SA had many advantages over other emerging markets, including its stronger infrastructure, a well-run economy and sophisticated financial markets, the telecommunications costs remained a glaring weakness.
Telkom has denied its costs are prohibitive and yesterday it reiterated that it was “committed to the process of consistently adjusting its pricing model in order to make telecommunications more affordable and accessible to business as well as the broader South African public”.
But Glocer said that unlike in the rest of the world, SA’s telecoms costs for running Reuters’ products and information terminals dwarfed the cost of the product itself.
“Where the communication line is more expensive than the product itself, this makes the service prohibitive. Here, certain services are beyond the price point of the buyer,” he said.
Compounding the problem, Glocer said, was that the quality of bandwidth Telkom was able to offer did not measure up to that in certain other emerging markets.
He said call centre jobs that could have been SA’s had already been lost because of this.
Glocer’s comments add to complaints from other groups.
Last year, the South Africa Contact Centre Community told Parliament that SA could potentially lose 100000 new call centre jobs because of high telecoms costs, as global call centre companies chose to operate in countries where costs were lower, such as India and the Philippines.
Eighteen months ago, international telecommunications group AT&T said it did not plan to increase its South African investment because of high costs, primarily in telecommunications.
AT&T said that while it used Telkom for 2% of its local business, this represented 25% of its total business costs in SA.
President Thabo Mbeki has also repeatedly highlighted the high costs of telecoms in SA.
Reuters chairman Niall FitzGerald is a member of Mbeki’s International Investment Advisory Council.