The Department of Communications has hit back at suggestions by the Democratic Alliance that it used its vote at the recent Telkom annual general meeting (AGM) to make sure that a compliant board is voted into effect.
The opposition argued that the state's vote against the re-election of four Telkom directors and two new management share incentive schemes is "ominous". The government owns almost 40% of Telkom's shares.
Communications minister Dina Pule says the state's decisions at the AGM were "informed by government's view that corporate governance and appropriate management of state-owned companies (SOCs) cannot be left to just any interpretation of our expectations".
Pule says the department uses its vote to drive and maintain:
1. business stability and viability,
2. service delivery to the public,
3. adherence to corporate governance and
4. the link between the objectives of government and the commercial imperatives.
"Those objectives include, amongst others, delivering value to the broader South African community and to our co-shareholders and investors," says Pule.
Balancing act
The department is now enhancing and protecting Telkom's share value while balancing that with the objectives of providing affordable connectivity to all South Africans. "This will be done through appropriate shareholder management input."
Pule says: "We have a management team in place and we are moving with speed, along with our fellow investors, to ensure that the vacant board seats are filled by the end of this calendar year."
In addition, the department expects Cabinet to pronounce on the options that are available to find a lasting and sustainable solution for Telkom's turnaround, says Pule.
"That solution must be underpinned by the creation of a balance between contributing to delivering the socioeconomic development objectives of this country whilst simultaneously facilitating a fruitful and commercially viable existence of Telkom."
Important asset
Telkom is part of the department's priority set and it has been working on a revised strategy, says Pule. She adds that part of the strategy, which started in 2006/7, is underway.
"The rest of that strategy, which pertains to broadband rollout and possible partners for fixed-ine and mobile telephony will be spoken to by March 2013," says Pule. She says this strategy needs approval from Cabinet and industry.
However, allegations that Telkom behaved anti-competitively still need to be sorted out, says Pule. Telkom is facing complaints lodged at the Competition Commission, one of which has yet to be heard by the Tribunal, and another has been appealed against.
"This is a key Telkom challenge that its leadership will have to contend with in the immediate term and into the future," says Pule.
"As we drive our mandates of digital inclusivity, we will seek to eradicate uncertainty in all the SOCs that report to the Ministry of Communications' custodianship. Cabinet supports us in these initiatives."
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