Tag: Telkom

A customer service representative responding on the official Telkom Twitter account has accidentally agreed with a negative comment about the company.

The user was complaining about the provider’s service delivery, and the representative replied without having correctly understood the context.

According to MyBroadband, a “professional Fortnite player Dennis ‘Cloak’ Lepore said in a tweet that ‘Spectrum might be the worst internet provider ever’. Spectrum is an ISP which serves users in the US.”

A South African Twitter user named Jonathan Oliver then “responded to Lepore’s tweet, stating ‘Nah @TelkomZA takes the number 1 spot’.”

Although both users were complaining about the service of certain Internet service providers, the Telkom customer representative responded with the following: “Yass and your continuous support keeps us up there! Thank you…”

The reply was widely mocked and shared on social media. It has since been deleted by Telkom.

Source: MyBroadband

Telkom, the partly state-owned South African telecommunications company, is billing the national police service for two contracts that cover virtually the same work, five people familiar with the situation said.

The Pretoria-based company secured a contract to work on the service’s switching centers, which allow the South African Police Service to communicate with staff and stations across the country, and started work in mid 2016 using Netxcom ICT Solutions (Pty) Ltd. as a subcontractor, the people said, declining to be identified because they aren’t authorized to speak to the press.

While Netxcom is continuing to do the work, Telkom has withheld some of the payments it owes to the subcontractor even though it has continued to receive money from the police, the people said. It is now in a legal dispute with Netxcom, which has sued to get the money it believes it is owed. Telkom said it did withhold some payments to subcontractors because of contractual “inadequacies” without naming Netxcom.

A few months after Netxcom started work, Telkom signed a separate R497-million ($34 million) contract, which will run for five years, with the police to do the same work on the same switching centers with a few minor additions. That agreement, which has been seen by Bloomberg, includes another subcontractor known as AppCentrix (Pty) Ltd. as a participant. It was not put through a competitive bidding process, as is mandatory for all government contracts over 1 million rand unless the requirement is waived by the National Treasury.

Treasury unaware
The Treasury says that it is unaware of the contract. The State Information Technology Agency, or SITA, which procures all of government’s information technology, was not consulted by the police on this contract as is also mandatory, the people said, declining to be identified because the information isn’t public.

Telkom spokeswoman Nomalungelo Faku cited confidentiality clauses when asked why a tender for the new contract had not been held. The police and SITA didn’t respond to queries. Netxcom and AppCentrix declined to comment.

“As a principle, Telkom does not withhold payment to its vendors,” Faku said by email, saying she was commenting on behalf of George Candiotes, Telkom’s executive for legal services. “However, during 2017 Telkom conducted a supplier review. Based on this certain actions were taken between Telkom and suppliers including the withholding of payments where certain inadequacies in the contractual arrangements were identified.”

Wasteful spending
Emails between senior officials of of Telkom’s BCX unit seen by Bloomberg said that the failure to pay Netxcom was souring Telkom’s relationship with the police and that Netxcom was still doing work for the police.

Telkom hasn’t answered questions on how the two contracts with the police differ.

The revelations come as Cyril Ramaphosa, who took over as president in February, is overseeing a drive to stem irregular and wasteful spending that’s led to the termination of boards of state companies.

Internal email communication, seen by Bloomberg, between Telkom staff including its chief executive officer, Sipho Maseko, and Candiotes corroborated what the people said about the non-payment of fees to NetXcom.

The South African Police Service “has not indicated any direct issues with the vendors or the work and we are receiving payment,” Candiotes said in an April email to Maseko. “Our view is that we are currently exposed in the instance where we cannot show why we cannot make payment, despite our contentions we have terminated the agreement.”

Telkom, which is 41% owned by the government, is trying to terminate the relationship with Netxcom in favor of its newer contract, the people said.

MTN and Telkom in rumoured merger

Source: MyBroadband

The Sunday Times reported that MTN South Africa and Telkom have held discussions regarding a possible merger.

A merger between the companies makes sense operationally, as it will create a telecoms powerhouse in South Africa with tremendous scale.

It will combine MTN’s strength in the mobile market and Telkom’s dominance in the fixed-line and fibre arena.

This scale will provide the companies with a competitive advantage in South Africa in both the fixed and mobile markets.

This, however, is the reason why such a merger will not be approved by the Competition Commission – unless strong political forces drive it.

MTN–Telkom plan not new
The plan to merge MTN SA and Telkom is not new. In 2015, MTN considered an acquisition of a majority stake in Telkom to challenge Vodacom’s dominance in South Africa.

At the time MTN reportedly held exploratory discussions about a possible offer for Telkom.

These discussions followed a planned network-sharing agreement between Telkom and MTN SA in 2014.

The plan was for MTN to take over financial and operational responsibility for the rollout and operation of Telkom’s radio access network.

MTN said at the time it does not expect the deal to require regulatory approval, but it expects resistance from industry participants.

MTN was wrong. In 2015, the Competition Commission recommended that the Competition Tribunal not approve a bilateral roaming agreement between MTN and Telkom.

The Commission said the transaction would impact the structure of the mobile market in South Africa, and would “prevent or lessen” competition.

Bigger deal will be more difficult
If the Competition Commission would not approve bilateral roaming and outsourcing of the operation of Telkom’s radio access network to MTN SA, a bigger deal will nearly certainly be rejected.

However, if there is enough political will to make such a deal happen, approval may be easier to get.

The South African government is a controlling stakeholder in Telkom, and President Cyril Ramaphosa was MTN’s chairman for over a decade – from 2002 to 2013.

If such a move can help the two companies to become more profitable and avoid further job cuts at Telkom, it may receive a favourable reception among political decision makers.

MTN comments on discussions
MTN South Africa’s executive for corporate affairs Jacqui O’Sullivan told MyBroadband that they remain in talks with Telkom regarding its roaming agreement.

“Reports regarding further discussions between the two operators are conjecture and MTN chooses not to comment on market speculation,” she said.

Telkom was asked for feedback regarding the discussions, but the company did not respond to questions.

What can SA sell?

A Cabinet committee has changed its tune regarding a plan to sell its full R13-billion stake in Telkom to fund the recapitalisation of South African Airways (SAA) and the SA Post Office, it was revealed at the mini budget last Wednesday.

By selling state-owned assets, Treasury aims to avoid breaching its expenditure ceiling by R3.9bn. This comes after its decision to bail out SAA with a R10bn appropriation and R3.7bn recapitalisation of the Post Office.

The change in tune follows Cabinet’s realisation that the opportunity cost of losing its 39.75% stake in Telkom would be too great.

Now, Cabinet is looking at selling departmental assets and expects a cash windfall from its release of 2.6MHz broadband frequency.

Treasury director general Dondo Mogajane told media on Wednesday that they can’t simply ditch all their Telkom assets. “Telkom is a well-performing share, contributing R900m to R1bn in dividends every year,” he said. “It is important that we hold on to that as much as we can.”

Later, Finance Minister Malusi Gigaba revealed in his mini budget speech that government has “decided to dispose of a portion of government’s Telkom shares, with an option to buy them back at a later stage”.

Hang on to Telkom

In an interview with Fin24 following the speech, Mogajane said government owns many assets which are not being used, which can be sold to limit the amount of Telkom shares they sell.

“We are currently looking throughout the whole of government,” he said. “We are engaging with Public Works, we are engaging with the Department of Rural Development in terms of assets that we have.

“Once we have identified all of those, we will make recommendations to the (Cabinet) committee, which will make these hard decisions to sell based on the quantum of what’s needed.”

This Cabinet committee comprises Gigaba, Economic Development Minister Ebrahim Patel, Public Enterprises Minister Lynne Brown, Telecommunications Minister Siyabonga Cwele and Science and Technology Minister Naledi Pandor.

“Our ceiling, as the books indicate, will be breached by R3.9bn, so we will be looking for assets that will clear that by March 31, so that we remain within the ceiling, even for the current year,” said Mogajane.

“For the MTF (medium-term fiscus), we have confirmed that we will not breach the ceiling and that is the commitment we have made.”

Regarding the release of broadband frequency, Treasury said in its mini budget that “the bulk of additional spectrum is ready to be allocated immediately, without requiring the migration of existing spectrum users to digital television”.

“The delay in allocating telecommunications spectrum constrains growth across the economy. Lack of radio frequency limits the ability of businesses to deploy new technologies and contributes to the high cost of broadband,” it said.

“A well-designed spectrum auction can promote transformation and improve competition as new participants enter the market.

“Universal service conditions can improve access for low-income households. And a competitive auction can sharply reduce data costs.”

By Matthew le Cordeur for Fin24

The revelation on Wednesday that finance minister Malusi Gigaba is considering selling a big chunk or possibly even all of government’s 39.3% in Telkom, at face value, is fantastic news.

There is absolutely no reason for government to continue to hold onto a significant stake in the telecommunications operator — if there ever was one, which is debatable.

On paper, now is the right time to sell the company. Under the leadership of CEO Sipho Maseko and chairman Jabu Mabuza, the company’s fortunes look better now than they have in many years.

President Zuma’s disastrous eight years in office mean the chickens are coming home to roost
The problem with selling distressed assets is they go for a song, raising almost nothing for the fiscus. Telkom is no longer a distressed asset — in fact, it is in such a strong position that it is taking the fight to its big mobile rivals, winning market share and giving them a serious headache. Consumers are loving it. Maseko’s praises should be sung from the hilltops.

It’s the wrong time to privatise state-owned assets when they are in trouble. It’s far better to turn them around, and then hive them off, ensuring the private investors that are brought in contribute meaningfully to the fiscus, in the process hopefully avoiding tax increases or even allowing for tax relief. South Africa desperately needs a well-managed programme of privatisation.

Black hole

The possible sale of Telkom — revealed in a secret cabinet document leaked to the Democratic Alliance — is being considered to raise money to throw into the black hole that is the national airline, South African Airways.

(That the DA was given this document is testimony to the fact that the ANC is a house divided. Secret documents are being leaked to the opposition, providing insight into the shambolic state of the ruling party. But that’s another story.)

So, Gigaba has a R10bn-plus hole to plug at the floundering SAA, which has been mismanaged for years under the watch of chairwoman Dudu Myeni, a close friend of President Jacob Zuma.

The concern is government is selling a good asset — using good money — to prop up an airline that should have been privatised years ago (and, of course, that shouldn’t have been allowed to be driven into the ground in the first place by incompetent managers).

But there’s a bigger issue here. Gigaba, facing a crisis over SAA, appears to be caught like a deer in the headlights, unsure about what to do. This is symptomatic of a finance minister out of his depth and, worse, a government that is failing.

Government already chased away Korea’s KT Corp, sending a terrible message to foreign investors that the country is not open for business.

If Gigaba simply starts selling government’s Telkom shares on the open market, it could prove disastrous for the telecoms operator’s shareholders. Not properly managed, the company’s share price could be decimated as the state dumps its holding.

Far better would be to sell the stake to someone through a managed process, led by advisers. But sell it to who?

Government already chased away Korea’s KT Corp, sending a terrible message to foreign investors that the country is not open for business. If there are potential foreign buyers, now is the time to ask them to step forward. But is this government prepared to sell the stake to a foreign company? Remember, it was the ANC government that almost scuppered Vodafone’s acquisition of Telkom’s stake in Vodacom, sending the rand tumbling at the time. Sanity, thankfully, eventually prevailed.

Local buyer?

Who locally could buy the stake? That’s far from clear. It’s unlikely the Competition Commission would permit one of Telkom’s big rivals to buy it. It’s not in consumers’ interests for that to happen as it would concentrate the market into the hands of three players.

But Gigaba, desperate for money to prop up an airline that has been ruined by his government, faces having his hand forced. The last thing he wants to — or should — do is to expand the budget deficit even further than it’s already stretched to bail out a bankrupt airline. He needs money from somewhere. Are there other options? Maybe. Government’s already sold a chunk of its stake in Vodacom to fund another state-owned disaster, Eskom. The Public Investment Corp, which invests public servants’ pension money, bought that stake. Maybe it will be asked to get involved again.

Whatever he decides to do, Gigaba can’t be rash about it. President Zuma’s disastrous eight years in office mean the chickens are coming home to roost. And the finance minister is in the unenviable position of having to try and fix some of the mess. The wrong decisions now could make things even worse.

By Duncan McLeod for TechCentral 

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