Telkom's viability 'at risk' - TechCentral

Telkom’s viability ‘at risk’

Jacques Schindehütte

Telkom’s operating expenses of R15,6bn in the first half of its 2013 financial year were almost level with its revenue of R16,1bn, meaning the company could soon be lossmaking.

This is the warning from chief financial officer Jacques Schindehütte, who says the “commercial viability of the company is at risk at the moment”.

“I am under no illusion that the commercial viability of this business is not resolved as we sit here today.”

Schindehütte says Telkom’s profitability is at risk and it needs clarity from government as to its plans for the company after cabinet decided not to support the sale of 20% of its equity to Korea’s KT Corp, a deal he says would have provided much-needed skills.

“We need to execute large-scale changes to the cost base,” Schindehütte says. Some of those changes might include reducing staff numbers.

Government needs to find ways to achieve its developmental objectives while ensuring Telkom remains commercially successful, he adds.

Addressing the cost base will be impeded by the change of leadership at Telkom, he says. Earlier this month, group CEO Nombulelo Moholi tendered her resignation. “We’re not going to get traction until the new leadership has taken over.”

He says it is “foolish to think Telkom can reverse the declining revenue trend” and that it can’t reduce costs “without touching labour”.

However, this will attract attention given the upcoming national election and goes against South Africa’s challenge of keeping people in jobs.

“A successful Telkom is important to all stakeholders,” says Schindehütte. “We’re relying on the new chairman [Jabu Mabuza] and board to make progress with government by the end of the first quarter of next year.”  — (c) 2012 NewsCentral Media

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