Telkom eyes pro­cure­ment as black own­er­ship lags

Finweek English Edition - - TECHNOLOGY - BY GUGU LOURIE

Af rica’s l argest f i xed-l i ne tele­phone group Telkom, which is yet to fully com­ply with South Africa’s broad based black eco­nomic em­pow­er­ment (BBBEE) reg­u­la­tions, is fo­cus­ing on boost­ing sup­pli­ers as it aims to im­prove its BBBEE rat­ing.

When measu r e d a g a i ns t t he own­er­ship pil­lar in­dex, Telkom is not f ully com­pli­ant with em­pow­er­ment reg ula­tions. Its move to­wards an al­ter­na­tive em­pow­er­ment model is per­haps best ex­em­pli­fied by its plan to in­vest more than R100m in en­ter­prise and sup­plier devel­op­ment with the launch of its Fu­tureMak­ers pro­gramme, which it an­nounced on 7 May.

“We want to en­able, em­power and in­spire en­trepreneurs to stretch t hei r a mbi­tions a nd make t hei r busi­ness vi­sions a re­al­ity,” said Telkom CEO Sipho Maseko. “By grow­ing en­tre­pre­neur­ial op­por­tu­ni­ties within ICT [in­for­ma­tion and com­mu­ni­ca­tions t ech­nolog y], we can c r eate j obs, i mprove ac­cess to tech­nolog y and de­velop a sta­ble and com­pet­i­tive sup­ply chain.”

Tel kom l ost i t s em­pow­er­ment own­er­ship cre­den­tials in 2010, when the po­lit­i­cally con­nected Ele­phant Con­sor­tium un­bun­dled its stake in the com­pany. Ele­phant’s share­hold­ers i ncluded for­mer-ANC spokesman Smuts Ngonyama, for­mer di­rec­tor­gen­era l of t he c om­mu­ni­ca­tions depa r t ment Andile Ng­caba a nd busi­ness­woman Glo­ria Ser­obe.

The group is ma­jor­ity-owned by gov­ern­ment, which holds more than 52% of its shares – nearly 40% through di­rect own­er­ship and the rest through the Public In­vest­ment Cor­po­ra­tion.

Un­der the lead­er­ship of Maseko, Telkom seems to be tak­ing a dif­fer­ent route to­wards em­pow­er­ing poor South Africans.

Maseko is ob­vi­ously keen to align the com­pany with the gov­ern­ment’s new strat­egy aimed at cre­at­ing black in­dus­tri­al­ists, rather than just tick­ing boxes of the own­er­ship pil­lar in­dex as pre­scribed in the BBBEE codes.

“There are a whole lot of things we are think­ing about in that space. Whether it is in the area of en­ter­prise devel­op­ment […] we re­ally want to find some­thing that is im­pact­ful in our so­ci­ety,” Maseko said last July.

Ad­dress­ing the paras­tatal ’s black own­er­ship re­quire­ments seems to have taken a back seat, with spokesper­son Jac­qui O’Sul­li­van hav­ing said that con­clud­ing BEE deals was not a pri­or­ity for Telkom at this stage.

“We are fo­cus­ing on en­ter­prise devel­op­ment as an em­pow­er­ment tool and there­fore the Fu­tureMak­ers pro­gramme has been de­signed to s t i mu­late t he es­tabl i s hment a nd growth of small busi­nesses, which Telkom be­lieves is es­sen­tial for long term eco­nomic sta­bilit y,” she said. “En­ter­prise devel­op­ment is a far more eff icient method of em­pow­er­ment in the cur­rent en­vi­ron­ment of un­sta­ble f i nan­cia l mar­kets a nd a weaker econ­omy.”

Telkom is one of SA’s big spend­ing com­pa­nies that sup­port black-owned f irms. Dur­ing the 2014 f inan­cial year, the com­pany pro­cured R4.3bn worth of goods and ser­vices from black-owned com­pa­nies.

It will be “fool­ish” for Telkom to sell an em­pow­er­ment stake to black in­vestors while they are still en­gaged in a process to turn around the com­pany, said one tele­coms an­a­lyst. “What will be a point of con­clud­ing a BBBEE deal? Will it help them to re­gain lost ground as a telco or will it pro­vide new rev­enue streams?

“Telkom should fo­cus on f ix­ing the busi­ness and for­get about seek­ing to do an­other BBBEE deal. It is a good thing that they are help­ing black- owned f irms. In short, what Telkom is do­ing with its Fu­tureMak­ers pro­gramme is to con­trib­ute to­wards the devel­op­ment of smaller black in­dus­tri­al­ists… this is good for the growth of our econ­omy.”

“EN­TER­PRISE DEVEL­OP­MENT IS A FAR MORE EF­FI­CIENT METHOD OF EM­POW­ER­MENT IN THE CUR­RENT EN­VI­RON­MENT OF UN­STA­BLE FI­NAN­CIAL MAR­KETS AND A WEAKER ECON­OMY.”

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