'We are not drowning'

Telkom's executive management is convinced the company will crawl its way back to being a competitive business, with cost-cutting and new growth areas on the agenda.

During his presentation to analysts and investors this morning, Telkom CEO Reuben September said: “I believe we are doing all the right things through renaissance. I wish I could do it faster, but I believe the current pace is necessary.”

While some of the results the company hopes for will only become apparent in time, it is working hard to turn around the business, he added.

Telkom's largest revenue contributor, its fixed-line customer base, has been on the decline for some time, and the loss of Vodacom as a revenue generator has not been kind to the company's financials.

However, September noted its restructuring, an extensive cost-cutting drive and a relook at outsourcing the company's non-core business will return 10% back into Telkom's pockets by 2011.

“We are doing a deep dive into our business. The deeper you dive, the longer it takes to come up. We are not drowning,” explained September.

“Multi-Links remains our first priority and, while green shoots are appearing, we need to improve the internal operations and corporate activity.”

At Telkom's last results presentation, it stated it hoped to have Multi-Links' EBITDA positive by the end of 2011, and appointed former Cell C head Jeffery Hedberg to lead the Nigerian business. However, majority Cell C shareholder Oger Telecom has kept Hedberg heading off to the African country by holding him to an employment agreement.

While Hedberg made an appearance at today's presentation, the company has not yet revealed when he will take up the reins in Nigeria.

September also has high hopes for a new strategy focus on data centre operations.

The company is migrating its own R2 billion worth of IT equipment into its data centres and will use it as both an internal platform and an external money-spinner. The new strategy is called Cybernest.

While many investors at the presentation were not pleased with the current results set, they have not given up on Telkom's ability to spin a good opportunity. Several investors noted Telkom has more opportunity than the mobile operators in terms of future growth.