Up­ward mo­bil­ity

Telkom Mo­bile made a profit for the first time in six years. We speak to the man of the mo­ment

CityPress - - News -

Telkom has been through hell as it has tried to mod­ernise its busi­ness. But this week, its mo­bile op­er­a­tions made a profit for the first time in more than half a decade. The man cred­ited for this turn­around is CEO Sipho Maseko.

The telecom­mu­ni­ca­tions com­pany has been shed­ding jobs due to poor de­ci­sions, con­sis­tent de­clines in its fixed-line busi­ness, slow re­sponses to rapid changes in the com­mu­ni­ca­tions sec­tor and a late en­try into the mo­bile space.

How­ever, this week Maseko an­nounced the pos­i­tive news, say­ing Telkom’s mo­bile di­vi­sion had turned an oper­at­ing profit. Also, it had made a sig­nif­i­cant profit at its over­all busi­ness.

Maseko, a lawyer by train­ing, joined Telkom as its boss in April 2013, bring­ing his ex­pe­ri­ence from Vo­da­com, where he was CEO and man­ag­ing di­rec­tor. When he ar­rived at Telkom, the com­pany’s mo­bile di­vi­sion had just sus­tained an oper­at­ing loss of R2.2 bil­lion in the year ended Septem­ber 2012. This week, that unit de­liv­ered an oper­at­ing profit of R214 mil­lion.

In an in­ter­view with City Press on Fri­day, Maseko at­trib­uted the prof­itabil­ity of the di­vi­sion to the “heroic ef­forts” of the lead­er­ship and the hun­dreds of peo­ple who work for Telkom Mo­bile.

“We have opened new chan­nels, launched new prod­ucts and we are lev­er­ag­ing data,” he said.

Telkom had not only been a price leader in the telecom­mu­ni­ca­tions space, but it “of­fered a lot more value” when it came to the de­sign of its pack­ages, he said.

“[The de­mand growth for voice phone calls] is near the end of its life­span and we have re­sponded to in­creas­ing cus­tomer needs for data in our prod­uct de­sign. We have aligned our prod­ucts to grow­ing cus­tomer re­quire­ments,” Maseko said.

The world of telecom­mu­ni­ca­tions is chang­ing, Maseko ex­plained, and this change was big­ger than Telkom’s mo­bile unit. There was in­creas­ing spend on broad­band and fi­bre prod­ucts, and cus­tomers weren’t both­ered about whether broad­band was de­liv­ered via mo­bile or fi­bre.

As a re­sult, Maseko and his team reck­oned they should drive the con­ver­gence of ser­vices in an in­te­grated bun­dle. This is part of the rea­son for the R2.6 bil­lion ac­qui­si­tion of IT com­pany Busi­ness Con­nex­ion Group in Au­gust last year and it will as­sist Telkom to be more com­pet­i­tive and open up new op­por­tu­ni­ties in the busi­ness space.

On whether his time at Telkom has been stress­ful, Maseko said it had pre­sented him with some of the “most fas­ci­nat­ing” mo­ments of his ca­reer. “No two days are the same,” he said. Telkom’s share­hold­ers – in­clud­ing gov­ern­ment with a 39% stake – have ben­e­fited from Maseko’s moves to turn the com­pany around. When Maseko joined the com­pany, Telkom’s share price was lan­guish­ing at about R15 a share. This week, it was quoted at R66.40 – a mas­sive 343% im­prove­ment, which val­ues the com­pany at R35 bil­lion.

But Maseko’s turn­around plan to re­duce costs at the com­pany came at a price. Al­most 7 500 peo­ple lost their jobs when the

SIPHO MASEKO by Justin Brown

com­pany in­sti­tuted re­trench­ments. Maseko said he was “eter­nally grate­ful” to the peo­ple who had taken vol­un­tary pack­ages. The job cuts had not been the only means that he used to re­duce costs – other sav­ings came from pro­cure­ment sav­ings and rene­go­ti­at­ing con­tracts, he said.

“We did lose many peo­ple, but it is a fact of life that tech­nol­ogy is chang­ing,” he said.

He added that, in the process, Telkom en­abled many of those who took pack­ages to start busi­nesses that the com­pany had utilised. In some in­stances, Telkom pro­vided them with cap­i­tal sup­port.

Maseko said that, at the end of Septem­ber, Telkom had 3.2 mil­lion cus­tomers, which in­cluded cor­po­ra­tions that signed up for the com­pany’s prod­ucts be­cause they “like the pric­ing and prod­uct de­sign”. It also at­tracted cus­tomers who favoured “post­paid and pre­paid pack­ages”, as well as clients who used a large amount of data for so­cial-me­dia plat­forms and video view­ing.

Maseko said the com­pany would con­tinue to play “an in­sur­gency role in the mar­ket”, even though it was not one of the dom­i­nant play­ers in the mo­bile mar­ket.

“You can’t box pound for pound against a guy who is big­ger than you. You’ve got to box, weave and re­treat – that’s in­sur­gency,” he said.

To boost Telkom’s mar­ket share, Maseko has been lead­ing the price war in the lo­cal mo­bile sec­tor to­gether with Cell C. Con­sumers should thank Maseko and Cell C for much more com­pet­i­tively priced telecom­mu­ni­ca­tions of­fer­ings and pack­ages, and for help­ing to break the Vo­da­com and MTN oli­gop­oly.


CELLING POINT Telkom CEO Sipho Maseko is cred­ited with the turn­around strat­egy for the paras­tatal’s mo­bile op­er­a­tions

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