Lessons from Telkom

I do believe that my son, a tolder now, will grow up not knowing who Telkom is.

They have 10 years left (at best).

State Owned Entity.

I will tell my son about how they had a monopoly in South Africa. That they controlled landline telephones and provided the first access to 50kb/s internet lines.

They upgraded to ADSL access and gave the country access to 10mb/s lines.

In terms of competition, there were third party “service providers” that would help in accessing connection to these lines.

At the end of the day though, Telkom was responsible in providing the country internet access and they did it.

The Zuma years came and SOE gave into corruption. Mismanagement. Illequiped leaders were appointed.

Contracts and tenders were issued to the wrong people.

Telkom had a monopoly control over the country.

Service levels dropped.

Technological advancements took place and they fell heavily behind.

Fibre lines were installed by independent third parties (SA government did not reinvest in infrastructure).

Telkom attempted online payments with an oxymoron. EasyPay.

The most difficult and non-user friendly payment gateway.

People were forced to make manual payments at convenient stores (well those with cash flow fluctuations like mine). Their debit order system didnt work easily for me (when others did).

Another of my memorable experiences is that Telkom tried to regain control of the market (in the last 3 years). To do so, they opened up retail stores in major malls.

However, when approaching these stores, access to their existing offerings was not given.

Instead only access to new mobile offerings was offered.

It was a great opportunity for the giant to engage with client demands and they rejected client needs.

Gave the people what they thought they wanted rather than what they needed.

They lost control of new internet communication gateways. They lost their monopoly and relevance.

LTE internet access was another advancement that reduced the need for their dated service.

A monopoly giant that has fell behind and lost relevance.

It is fascinating to think that a monopoly giant like Telkom could fall.

This whole transaction was avoidable. Government could have enabled Telkom to keep control of fibre regulations.

It would have been restrictive for SA public but it would have ensured Telkoms future.

It is a valuable lesson in leadership.

This could have been avoided. This should have been avoided.

Amazingly, our elected government has a proclaimed socialist agenda. They are on a drive to allow government to own all assets. That way, they can provide land and jobs to the masses (as so they promise to do at least).

However their actions (or lack of actions) has resulted in the private sector stepping in and taking control. Which is complete the opposite of what the elected government is trying to achieve.

It just goes to show how they have no idea of what they are doing and how to do.

In the news today:

Parastatal Telkom intends to axe 3 000 of its workers as it grapples with increasing debt and a decline in the fixed-voice market in a tight economy.

In a formal notice issued to organised labour on Wednesday, Telkom said South Africa’s depressed economy, regulatory uncertainty and a tough competitive environment had taken a toll on its business.

Alfie Ngubo, Telkom’s group executive for employee relations, said in the letter the retrenchments would impact its support employees, specialists, supervisors and managers in the Openserve, consumer business, small and medium business, and the Telkom corporate centre divisions.

“For Telkom to survive the current and anticipated tough trading conditions – forecast to deteriorate in the short to medium term – it is imperative to seek and implement measures to drastically reduce costs, eliminate efficiencies and improve operational and financial performance to secure its continued commercial viability and, therefore, security for the majority of employees,” Ngubo said in the letter.

He said the deteriorating economic climate, increased operational regulatory and competitive constraints, and the rapid migration from fixed voice to data had hurt the business.

Its fixed-voice market, which makes up half of Telkom’s gross revenue, was under-performing, while both Openserve and the consumer business required a different skills set and were out of sync with the new focus on fibre, mobile voice and data services, he said.

“The decline in fixed-voice and data services, and the concomitant decline in revenues, is primarily due to migration to mobile voice and data, as well as fibre, where Telkom is one of the smaller players in terms of size and subscriber market share.”

Telkom’s net debt increased to more than R11.7 billion in the six months to September from R8.8bn in March.

It said the rapid migration to voice and data services had not been accompanied by an agile and flexible organisational and operational adaptation.

“As a result, our current organisational and operational models are out of sync with the new mobile-focused business,” the company said.

The retrenchments follow previous steps to improve financial stability, including salary freezes, restructuring and voluntary severance packages.

The group said it planned to embark on a consultative process with organised labour, in line with the requirements of section 189 of the Labour Relations Act from Wednesday.

It also proposed roping in the Commission for Conciliation, Mediation and Arbitration to facilitate the consultation process.

South African Communications Union general secretary Karriem Abrahams yesterday criticised Telkom for reducing staff.

Abrahams said the company had outsourced workers more than 18 months ago to companies including Perx , Smollan and BCX, and charged that Telkom had dictated through service-level agreements that ex-Telkom staff must be reduced.

“We can take it further back to where Telkom outsourced to WNS about four years ago, and that was well over 1 000 people, where 90 percent of the ex-Telkom staff were retrenched,” Abrahams said, adding that employees were paying for the missteps of managers.

Telkom’s share price had a tumultuous year, having fallen from about R100 a share in June.

In December, the company, which is 40 percent state-owned, informed the market that its proposed takeover of Cell C was off the table, after receiving written notice from Cell C’s board rejecting its non-binding proposal.

Telkom shares closed 0.03 percent higher at R34.61 on Wednesday.

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