Telkom’s turn-around proof that even the most dysfunctional SOE can be saved


Who would have thought that Telkom, once the most dysfunctional of lazy and ineffectual monopolises, would emerge as the most efficiently run and most profitable of state-owned enterprises?

The once-floundering telco has rebuilt itself as a nimble and effective operation, demonstrating that anything is possible with clear vision, good management and a lack of political interference.

Telkom is blessed, if that is the word, by not being in mining, energy production or flying planes. This has made it immune to the wanton looting that has plagued Eskom and SAA under the uncontrollable looting of the Presidunce Jacob Zuma kleptocracy.

Apart from the obvious foolishness of bailing out the hopelessly useless SAA, Malusi Gigaba’s secret plan to sell Telkom shares to raise that bailout money is a new nadir of financial madness. Selling a stake in a good asset to rescue a bad one demonstrates why Gigaba, who introduced that absurd unabridged visa for children requirement that killed our tourist industry, just isn’t up to the task of rescuing our economy.

SAA is just the latest of the state-owned businesses to need a bail out after being run, quite literally, into the ground by a Zuma-appointed stooge, in this case the financially illiterate Dudu Myeni. I had the misfortune to fly its low-cost airline Mango last week and that is no better. It’s just as badly mismanaged and a cash-losing folly from the age of the nationally-owned airline as bastion of patriotic pride. Mango was launched to siphon off the low-cost airline threat and is only functional because SAA was subsidising Mango. SAA itself revealed this in a labour dispute with its former CEO.

Telkom in the meantime – under CEO Sipho Maseko and chairman Jabu Mabuza – is a demonstration of what can be done with good leadership, good strategy and innovative thinking. In the last few years, it has been turned around from a hopeless and floundering has-been, shedding its unnecessarily large labour force and spinning off the infrastructure division, now called Openserve.

Last week Telkom unveiled free video and music streaming through its already revolutionary data-focussed packages. These FreeMe deals recognise that the mobile market has shifted from voice-centric calls to data-intensive internet use, social media, and music and video streaming.

The streaming service offer, called LIT, makes Telkom the most innovative mobile operator in the country. This is in part because the only way to innovate in a relatively mature mobile industry is at the business model level – but is also what you’d expect from a fourth-placed operator with a mere 2% market share.

Telkom literally has nothing to lose, and a vast economy of scale of data that it can leverage to grow its user base.

But, most crucially, it hasn’t been infected with the Gupta corruption and demonstrates showing what effective leadership can do to an ailing business, even if it’s still state-owned.

Maseko, Mabuza and the executives that have turned it around – including former chief operating officer Brian Armstrong – deserve all the glowing praise they are getting right now.

Instead of bailing out other state-owned enterprises, perhaps Maseko and Mabuza should be redeployed to Megawatt Park to right that Eskom ship.

This column first appeared in Financial Mail


About Author

Toby Shapshak is editor-in-chief and publisher of Stuff, a Forbes contributor and a Financial Mail columnist. He has been writing about technology and the internet for 20 years and his TED Global talk on innovation in Africa has over 1,5-million views. He has written about Africa's tech and start-up ecosystem for Forbes, CNN and The Guardian in London. He was named in GQ's top 30 men in media and the Mail & Guardian newspaper's influential young South Africans. He has been featured in the New York Times. GQ said he "has become the most high-profile technology journalist in the country" while the M&G wrote: "Toby Shapshak is all things tech... he reigns supreme as the major talking head for everything and anything tech."

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