Telkom Media was bad decision

By Candice Jones for Telkom
Johannesburg, 02 Apr 2009

Telkom should never have considered providing content; rather its networks should only be used to carry content.

This is according to Telkom CEO Reuben September, speaking at a media briefing held yesterday in Sandton. September says he argued against holding onto Telkom Media since he took up his position as the head of the business just over a year ago.

Telkom, which owns 66% of the pay-TV broadcaster, has been in discussions with several businesses to potentially take its shareholding off its hands. The company was hoping to regain some of the R700 million it invested in the business.

However, last week, it became clear all hope of a sale had been washed away with the global economic crisis and Telkom announced its intention to close Telkom Media's doors. While September did not indicate whether the telecoms business had any intention of recovering the massive investment, September did say Telkom should not have been involved in the creation of content.

Funding woes

“We tried hard to sell it, and on several occasions interested parties indicated they had the funding required to buy it. In the end, it turned out that they didn't,” he noted.

September hinted that an international business had been the primary bidder and the credit crisis left it without resources to raise funding. “It turns out this company's country was hit hard by the global economic crisis.”

Telkom still needs to meet with other shareholders of the business to have the company shut down.

The minority shareholders in Telkom Media are Videovision Entertainment (15%), MSG Africa Media and WDB Investment Holdings (5%), a staff incentive trust (4%), as well as an unnamed black empowerment shareholder (5%).

Staff shock

Employees of Telkom Media are still reeling from last week's announcement. One insider said Telkom's turnaround has been a shock.

We tried hard to sell it, and on several occasions interested parties indicated they had the funding required to buy it. In the end, it turned out that they didn't.
Reuben September, CEO, Telkom

“It's a very strange situation. The business plan was very viable and had been re-evaluated a number of times. It could be that some elements within Telkom could have been unhappy with some aspects of the plan, but this was never communicated to Telkom Media.”

However, Telkom is in the process of shaving off a weighted section of its business, in the hope of competing in an increasingly competitive telecommunications market. It has said it needs to change its business practice so that it can keep pace.

The company is also stripping itself of its mobile business Vodacom, a move that will allow it to compete unrestricted in the local market.