Making a good call

Telkom’s turnaround is proof that even dysfunctional state enterprises can be saved by solid leadership

Telkom, once the most dysfunctional of lazy and ineffectual monopolies, has emerged as the most efficiently run and most profitable of SA’S state-owned enterprises. Who would have thought?

The once-floundering telecom company 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 or energy production, or flying planes. This has made it immune to the wanton looting that has plagued Eskom and SA Airways (SAA) under the uncontrollable looting of the President Jacob Zuma kleptocracy.

Apart from the obvious foolishness of bailing out the hopelessly useless SAA, finance minister 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 isn’t up to the task of rescuing our economy.

SAA is just the latest state-owned business to need a bailout after being run, quite literally, into the ground by Zuma-appointed stooge Dudu Myeni. I had the misfortune of flying in its lowcost airline, Mango, last week and that is no better. It’s just as badly mismanaged and is a cash-losing folly from an age when the national airline was a bastion of patriotic pride.

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 past 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-focused packages. These Freeme deals recognise that the mobile market has shifted from voice-centric calls to dataintensive 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 it is also what you’d expect from a fourth-placed operator with a mere 2% market share.

Telkom 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, showing what effective leadership can do to an ailing business, even if it’s still state owned.

Maseko, Mabuza and the executives who have turned Telkom around deserve glowing praise.

Instead of bailing out more of its enterprises, the state should perhaps redeploy them to Megawatt Park to right the Eskom ship.

Malusi Gigaba’s secret plan to sell Telkom shares is a new nadir of financial madness