Telkom’s new enemy
A costly new threat to Telkom, the listed monopoly that South Africans love to hate, is set to rapidly take root in the corporate world.
Voice over Internet Protocol (VoIP) technology is being implemented to replace traditional telephone systems, at Mr Price, with millions of rands of costs’ savings expected in the next five years.
This emerged on the Moneyweb Power Hour on Thursday when host Alec Hogg quizzed Stewart Cohen, joint chairman of the Mr Price Group, on the company’s financials.
Cohen said Mr Price expects to save R20m to R50m a year by implementing VoIP technology.
The move will increase costs in the first year, because there will be duplications in the system.
After that, it is expected to cut costs to the extent that the move will add “a few cents to the company’s earnings”, observed market commentator Evan Walker of RMB Asset Management.
VoIP is expected to become popular over the next few years as other companies follow suit, and this development could be “a bit worrying” for Telkom shareholders, Moneyweb Power Hour listeners heard.
However, Walker said it may not be bad news for Telkom, though shareholders have “got to hope that volumes come through on the Telkom side, and people use it more”.
Moneyweb
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