Telkom is refocusing its energies on several specific areas in the financial year to come. The group is to continue its restructuring drive, and plans to expand and modernise its networking services while deploying new technologies to market. It also intends significantly increasing its Black economic empowerment (BEE) spend.
Restructuring
"Our efficiency drive has seen the reorganisation of the company from region-based reporting to function-based reporting, said Telkom`s CEO, Sizwe Nxasana, during the release of the company`s annual results for 1999/2000. "We`re outsourcing our non-core businesses, managing staff numbers down to more competitive levels and introducing more efficient procurement and stock control measures"
The company had shed about 12 000 positions by end-March 2000, with more than 80% of the departures being either voluntary or achieved through Telkom`s outsourcing programme.
The company says the process of managing staff numbers down was underpinned with a social plan designed to help staff start their own small businesses, retire in financial security or prepare for alternative employment.
Five non-core entities were outsourced during the year under review. In the process, about 2000 employees were transferred to the new business owners.
"Telkom is [...] developing online procurement strategies with a number of suppliers, which will ultimately see sizeable savings in time and money and improved controls and supplier relationships," Nxasana said.
Network expansion and modernisation
The telecoms giant says it met 15 of its 16 licence targets in the past year and made progress in the roll-out of a three-year cumulative total of 1,6 million new phone lines. Over one million of the new lines were rolled out in under-serviced areas, putting Telkom 90 000 lines ahead of its cumulative delivery target for these areas.
"Line digitisation is an important part of our network modernisation programme, as this is the platform on which we can build value-added services like caller line identification, electronic call answering and innovative billing systems like per-second billing. Our three-year total stands at just over one million lines, against the cumulative licence target of 98 000."
The past year also saw Telkom achieving the two licence targets - repairing business and residential telephone faults within 48 hours - which it had missed in 1998/99.
"In real terms this means that over the past two years, we have achieved a steady 17,1% improvement in repairing business faults and a 9,7% improvement for residential faults."
Telkom expects to realise further improvements through projects such as its recently opened National Network Operations Centre (NNOC) and higher line-revenue generation through digital, network-based product development.
Black economic empowerment
The past financial year has seen Telkom push its Black economic empowerment (BEE) spending up by almost 100% to R3 billion, representing 28% of the total volume of the company`s purchases.
"Recognising that many black small to medium enterprises (SMMEs) struggle to do business with major purchasers, we are overcoming this through strategic initiatives designed to make us more accessible to these suppliers, as well as to improve their capacity to do business."
"In 1999/2000, we spent more with black SMMEs (small to medium enterprises) than with large black suppliers for the first time, although both enjoyed substantially increased business with Telkom from the previous year. Of the R3 billion spent on economic empowerment, R456 million went to purchases from black SMMEs (suppliers with annual revenue of under R25 million), R435 million to large black suppliers, and just over R2 billion to suppliers with significant black economic empowerment programmes. This supports our belief that SMMEs will be the main driver for job creation in future," Nxasana explained.
"Contracts totaling R409 million were awarded to small, medium and large black ICT (information and communication technology) suppliers that were at least 51% black owned and controlled. Of this amount, just over R77 million went to black ICT companies with annual turnover of less than R25 million. Contracts awarded to large black suppliers earning more than R25 million a year amounted to R332 million, with purchases covering computer software and hardware, IT services, cable, transmission and telephone equipment."
New technology deployment
Bandwidth availability remains a key focus for Telkom. The total number of 2Mb circuits grew by 53% in 1999/2000, with even higher growth of 78% in ISDN primary rate services.
"ISDN services have consistently shown exceptional growth since the commercial launch in April 1995, and are now growing at an average rate of 7% per month. The key factors behind our ISDN success were the cuts in monthly rental rates in both 1999 and 2000, and the increase in availability of basic rate ISDN in the network to 96%."
Telkom has piloted new technologies like Digital Subscriber Line (DSL) and Dense Wavelength Division Multiplexing (DWDM), which Nxasana said had the potential to increase the capacity of Telkom`s optical fibre networks by 40 times in the next two years. Both these capacity-enhancing technologies are being tested in limited pilot applications.
"Apart from that, we`ve upgraded the transport network with the latest synchronous digital hierarchy (SDH) equipment over optic fibre self-healing rings, and started deploying ATM technology extensively across the country in 1999."
"Early in the new financial year, we will begin the migration towards a Next Generation Network (NGN) that will support one connection capable of handling voice, data and video, making the virtual office a reality," said Nxasana.
In addition, the signing of an agreement on the SAT-3 WASC SAFE cable project in June 1999 has paved the way for an undersea optical fibre system that would cater for Sub-Saharan Africa`s burgeoning telecommunications needs for the next decade.
"This US$600 million project has brought together 40 nations and some of the world`s most influential telecommunications players. Expected to be fully operational in December 2001, this system will stretch nearly 30 000 kilometres and will link Africa to Europe and Asia.
"It consists of an 80 gigabit link, with capacity equal to 960 000 simultaneous (non-compressed) telephone conversations, and the cost of transmission is significantly less than that of a comparable satellite transmission," said Nxasana.
He added that one of the major benefits of the project was that it would be owned, controlled and maintained by the individual operators.
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