Telkom has stirred up a hornet’s nest in the information & communications technology (ICT) sector. The company, which buys goods and services worth billions of rand each year from the ICT industry, is following through with a threat, first made in 2006, that it will not procure from companies, including the local subsidiaries of multinationals such as IBM, Oracle and Hewlett-Packard (HP), that do not have at least 30% black ownership.<\/p>\n
German business software giant SAP has roasted Telkom, which is 39% state-owned, over its demands. SAP Africa MD Claas Kuehnemann could not be reached for comment, but news reports last week suggest the company is seething. At a recent conference in Cape Town, SAP deputy CEO L\u00e9o Apotheker told ITWeb the industry “would like to see a single set of rules that are predictable in terms of long-term investment planning. It would be a lot easier to do business in SA if everyone played by the same rules.”<\/p>\n
Apotheker’s outburst follows news that Telkom has refused to give HP any new supply contracts. This after it reportedly rejected HP’s equity equivalents programme, despite the fact that such programmes have been given the green light by the department of trade & industry. HP does score the required points in terms of the empowerment codes – Telkom just chooses to ignore that.<\/p>\n
Equity equivalents allow multinationals to score extra points in categories of empowerment other than equity, including enterprise development, skills development and employment equity, to make up for the points they don’t score in the equity component of the upcoming ICT sector charter.<\/p>\n
Instead of selling 30% of its equity to black shareholders, as prescribed by the draft charter, HP will invest in skills development through the new HP Business Institute and pump R150m into programmes aimed at supporting black empowerment in the sector.<\/p>\n
Multinational IT companies, especially American ones such as IBM, HP and Microsoft, have long maintained regulation in their home markets makes it difficult, if not impossible, for them to sell equity in their SA subsidiaries. But a handful of companies, including US hi-tech firms Verizon and Unisys, have sold equity to black South Africans.<\/p>\n
Networking giant Cisco has taken a different approach, selling a small percentage of the equity in its parent company to a local consortium, Lerako, while retaining 100% control of its local office.<\/p>\n
Most multinationals contacted by the FM this week were loath to talk about Telkom’s approach for fear of upsetting the company. All HP would say is that Telkom was a customer of the company and that “as per HP’s policy, it does not discuss any of its customers in public forums”. It says it is “actively implementing” its enterprise and skills development programme and a launch event will take place at the end of November. The first intake of graduates is scheduled for February 2008.<\/p>\n
There’s no doubt Telkom has power to influence empowerment, not only in the ICT industry, but across all business sectors, through its procurement spend. In the 2007 financial year it directed R8,8bn in spending towards empowered suppliers, including suppliers with “significant” empowerment programmes, up from R6,4bn in 2006; R1,5bn of its 2007 spend was with black small, medium and micro enterprises.<\/p>\n