Moholi's Telkom challenge - TechCentral

Moholi’s Telkom challenge

[By Duncan McLeod]

Finally, Telkom has a new group CEO. After years of instability, the organisation should have a chance to get settled. It is steadiness at the helm that is paramount if it’s going to survive and perhaps even thrive in a cutthroat competitive environment.

Analysts and market watchers have welcomed the appointment of Nombulelo “Pinky ” Moholi as Telkom’s CEO from 1 April. Apart from a brief sojourn at Nedbank, she’s been at the telecommunications operator for more than 15 years and understands intimately how it works, its history and the myriad challenges facing it. She’s also well respected by her competitors, who admire her openness and willingness to engage with them — and to work with them when necessary.

For too long, Telkom has been abused. The appointment to leadership positions of people who were not qualified to lead a challenged organisation in a technically complex market has cost it market share and undermined its effectiveness, allowing new rivals to gain a toehold. Also, the group is fraught with political intrigue and persistent allegations of corruption. To put it mildly, Moholi has a lot on her plate.

But under communications minister Roy Padayachie — arguably the first competent person to occupy the portfolio since Jay Naidoo in the Nelson Mandela administration — things may finally be looking up for Telkom. Padayachie moved quickly to find a new chairman for the group in the somewhat controversial but solid Lazarus Zim and played an important role in supporting the board’s decision to promote Moholi from her position as MD of Telkom SA.

Now the real work must begin. Telkom is challenged on a number of fronts. In almost every part of its business it’s facing smart and well-financed competitors. The exception is the local loop, the last mile of copper cables that connect consumers to its network, but even this will be prised open soon to competitors through a regulatory intervention known as local-loop unbundling.

In international capacity, where Telkom was once able to charge exorbitant rents, prices have plummeted as billions of rand have been pumped into new undersea cables. In national backhaul, other operators are building fibre networks as fast as they can. And fixed-to-mobile substitution continues unabated, pushing down fixed-line teledensity. Copper theft also remains a big challenge.

Then there’s Telkom’s Africa strategy, which hasn’t delivered. Its ill-advised venture into the Nigerian wireless market still needs fixing. And its forays elsewhere on the continent haven’t achieved much either, and need review. Throw into the mix that Telkom needs to reduce its workforce in the face of union resistance — and with its biggest shareholder, government, keen to avoid job losses — and the scale of the challenge facing Moholi becomes clear.

Moholi has already said she would continue with the strategy adopted by the group’s senior management, led by outgoing acting group CEO Jeffrey Hedberg. That is probably the correct approach in the short term. But in the longer term, once Telkom is stabilised, Moholi will need to take some big and calculated risks, one of which may involve replacing its ageing copper local loop with fibre.

Already, one potential challenger, i3 Africa, is talking about building a national fibre-to-the-home network at a cost of up to R6bn over the next five years. If i3 Africa gets it right — admittedly it’s a big “if” right now — then Telkom could find its core fixed-line business under grave threat.

Of course, Telkom still owns vast infrastructure and is in a strong position to capitalise on this and the group’s other strengths. It’s up to Moholi to seize the opportunity and make it work.

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