Telkom rejects Cosatu's accusations

By Candice Jones for Telkom

Johannesburg, 05 Jun 2009

Telkom says it is doing fine without Vodacom, responding to comments made by the Congress of South African Trade Unions (Cosatu), which said Telkom is “more of a disaster daily”.

Cosatu secretary-general Zwelinzima Vavi held a press briefing yesterday, where he expressed the congress's concerns about the sale of Vodacom to Vodafone. He indicated that without Vodacom, Telkom's service had started to deteriorate. “As far as we can tell, Telkom is more of a disaster daily. Not rolling out in rural areas.”

Vavi also indicated Telkom would have been financially better off holding onto Vodacom. “As you know, most of Telkom's profits came from the 50:50 ownership.”

However, Telkom responded this morning, reiterating its own security in the local telecoms industry. “Telkom is doing well in delivering on its strategy of defending and growing profitable revenues,” explains Telkom's senior specialist for media relations, Ajith Bridgraj.

The company says it is fast expanding into markets that it was previously restricted from entering. “The transaction with Vodafone has unlocked value for Telkom shareholders and has freed Telkom from the restrictive shareholders agreement. Telkom is now free to pursue its growth strategy and is better able to defend its core fixed-line business,” he notes.

Telkom has long been adamant it does not rely on Vodacom for the bulk of its income. Bridgraj reiterated this morning that the company has more of a chance to flourish without being shackled to strict shareholder agreements. “Telkom is now free to compete.”

The South African government owns a majority stake of 39% and made a tidy profit over the sale of Vodacom through an unbundling dividend handed out by the listed business. Telkom's mild response to Cosatu may well be to keep favour with the newly-appointed administration.

Cosatu's comments were not restricted to Telkom's ability to compete. Vavi also questioned the validity of the Independent Communications Authority of SA's (ICASA's) decision to allow the Vodacom sale to go through.

Vavi said ICASA's actions needed to be “debated” to determine whether the regulator had performed its duties in the matter. He added that, if ICASA is found to have failed, then it does not deserve to continue being the country's communications regulator.

ITWeb was not able to reach the regulator to determine whether it felt it had done its job during the Vodacom, Vodafone process.

The congress has an outstanding legal application against ICASA's decision to allow Telkom to release Vodacom into Vodafone's hands, and has also arranged a meeting with ICASA's leadership to discuss the matter.