Telkom: Zuma's broadband plans 'lost in translation'

2015-02-13 17:27

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A day after broadband and connectivity trended in Parliament for all the wrong reasons; Telkom CEO Sipho Maseko set the record straight to City Press about government’s plans to roll out broadband.

In the state of the nation on Thursday night, President Jacob Zuma said that government had “decided to designate Telkom as the lead agency to assist with (the) broadband roll out”.

This has prompted some questions around what this will mean for private Telkom investors after news agency Bloomberg quoted Telecommunications Minister Siyabonga Cwele saying that “the rollout of broadband is quite a costly exercise. Telkom has got its own balance sheet which can meet some of this demand”.

Some took this to mean that Telkom may have to provide cash from its own coffers for the government project.

The fixed-line operator has been working on a turnaround strategy to plug some of its financial holes, including retrenching staff, as it struggles with declining fixed-line usage.

But Maseko said that the government will be a client, even though it is Telkom’s largest shareholder with a 39% stake and the Public Investment Corporation holding another 10%.

“I think that things may have been lost in translation here: government is the client and Telkom is the implementing or executing agency so government will fund all of it,” said Maseko in a phone interview with City Press on Friday.

He said government representatives perhaps meant that they would use Telkom’s existing infrastructure instead building a new network, and “when resources are constrained it is a sensible approach,” he said.

“What we need to do now is sit down with government and have proper commercial agreements because what we had was a headline,” he said.

“We need to discuss what type of infrastructure they want and what it will cost, etc. But ultimately they are the client and we are the provider. What we will try to do is optimise their resources as best as possible and [find] what is the best solution.”

He said this will not interfere with Telkom’s plans and strategy to service customers with high speed broadband.

But he said investors should be happy about this development.

“Government is a big and important client and our investors should be happy that we are demonstrating an ability to secure and support this project going forward on commercial terms.”

He also responded to speculative media reports that Telkom was up for sale and that MTN was considering buying it.

He said although the news that MTN wanted to buy it was “encouraging” he is not aware of anything like that and that Telkom was not for sale.

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