[By Duncan McLeod]
New communications minister Roy Padayachie brings talent and fresh vigour to a portfolio long in need of both. But his desire to hang on to government control over Telkom makes little sense.
I wrote in this column two weeks ago about how Padayachie was a breath of fresh air at the department of communications. He’s wasted no time trying to solve some of the intractable problems on his plate, not least among them the disaster that is the SABC.
And, unlike his two predecessors, he’s adopted a consultative approach. As a start, he’s planning to meet the CEOs of the 30 biggest companies in the communications technology industry to get their views on what needs to be done from a policy perspective.
Padayachie also has a refreshing approach to the media. He is accessible to journalists — unlike his predecessors Ivy Matsepe-Casaburri, who openly detested the media, and Siphiwe Nyanda, who rarely engaged with the press. At his first media conference last week, Padayachie wanted to know how his ministry and department could work better with journalists.
I think he’s going to achieve a great deal of good things during his term in office.
So it almost pains me, so soon after his appointment, to criticise him. However, I have a feeling he’ll be more welcoming of criticism than his predecessors. He might even take some of it on board.
The reason for my criticism is remarks he made in an interview with me last week about government’s involvement in Telkom. Padayachie warned that government wouldn’t want to lose the control it exercises over Telkom when special rights it holds expire early next year. Padayachie said government was concerned about the implications of the termination of the “golden share”, known as the “class-A” share, next year.
The golden share gives government a number of special rights over ordinary Telkom shareholders, including the right to appoint the group’s chairman.
The Public Investment Corp, government’s pension fund investment vehicle, holds another special share, the “class-B” share, which also provides special rights over ordinary shareholders.
The two shares fall away on 5 March 2011, eight years after Telkom’s listing. The JSE has never liked the special shares but allowed them at the time of Telkom’s listing, ostensibly in the national interest.
But JSE CEO Russell Loubser told me last week that the bourse would fight any attempt by government to extend the special rights it enjoys over ordinary shareholders.
It’s not clear what government intends to do — Padayachie is planning to meet other ministers to discuss the issue in the next few weeks — but a high-profile battle between the JSE and the state over shareholder rights is the last thing SA needs.
Padayachie describes Telkom as a “strategic asset” for government. “We need Telkom. Telecommunications is too important an industry for us not to have a direct and active presence in the sector.”
This is woolly thinking. Ideologically, it belongs in a bygone era. Padayachie says telecoms is a critical sector for job creation. It will play a crucial role in setting SA on a higher economic growth path.
I agree, Mr Minister. That’s why government ought to sell its 39% stake in Telkom, freeing it of the dead hand of the state. There are other ways of bringing telephony and broadband to rural areas than owning a big chunk of Telkom.
Rather, government should be setting the private sector free to provide services to an ever-expanding number of South Africans through robust competition. If Padayachie really wants to create jobs and grow the sector, now is not the time to be clinging to discredited ideology.
- Duncan McLeod is editor of TechCentral; this column is also published in Financial Mail
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