Healthier business to focus on growth

After spending five years stabilising the business, a healthier Telkom is ready to shift into growth mode, CEO Sipho Maseko said on Thursday .

“We had to earn the right to start thinking about growth; we couldn’t even begin to think about growth on an unstable platform,” said Maseko, who joined Telkom in April 2013 to turn around what was then an ailing business.

“We’re now thinking about growth in a whole different way, we’re now at that stage,” he said after shifting the group’s finance chief, Deon Fredericks, into the newly created role of chief investment officer.

Fredericks, whose previous role was filled by Tsholofelo Molefe, would look for acquisitions and partnerships in fibre, cloud computing and valueadded services, including content, Maseko said.

The “conservative” chief investment officer would also be tasked with putting in place “a proper investment review and management process”.

While analysts said Telkom had about R4bn to play with before it breached its stated debt ceiling — or more if it monetised its property portfolio — Maseko said “the headroom is slightly more than that”.

“We’ll be thoughtful and prudent about how we manage our investment drive…. Part of the brief that [Fredericks] has is looking at how we ensure all of the investments we make will make this company stronger in the next five and 10 years.”

Maseko said Telkom would look for healthy businesses that were reasonably priced and a good strategic fit. Asked whether Telkom could digest a company the size of fibre operator Vox Telecom, which is said to be up for sale with a price tag of about R3bn, Maseko said “that’s small enough and digestable enough”.

“We can probably pay that from our cash reserves, so we’ll be able to do medium-sized transactions like those easily.”

US bank JPMorgan said in a research report in May that Telkom offered “the most compelling risk-reward trade-off in SA telecoms, in our view”.