Behind the struggle to change Telkom
Two men spearheading the revolution speak candidly about BCX, competition and recent management resignations…
One gets a strange feeling when you walk into Telkom’s sprawling National Business Solutions Centre in Centurion. This atmosphere is quite unlike the overwhelming sense of bureaucracy at Telkom Towers in Pretoria.
It’s almost as if the change is being led from here. The building is at the end of a short road in an area unimaginatively named TechnoPark. Most don’t even know it exists.
Perhaps it’s the change of scenery?
At the front of the building, squeezed into the right-hand corner before the security turnstiles is the war room. Not literally, of course. Rikus Matthyser, chief strategy and operations officer at Telkom Media, and newly-appointed CEO of Telkom Media, Mandla Ngcobo, share adjoining temporary offices.
There is a lot to do: pay TV hearings at Icasa in a few weeks time, the postponed Competition Tribunal hearings into the proposed Business Connexion deal, moving Telkom Media to its own offices.
Everyone jokes that Ngcobo’s office has a revolving door.
It may seem weird that Telkom Media bosses have an opinion about the BCX deal, but there are big similarities between the potential acquisition and the envisaged media business. Of course, Ngcobo’s involvement is more direct seeing as he was (up until a few weeks ago) in charge of Telkom’s mergers and acquisition strategy at executive management level.
Matthyser and Ngcobo speak with a refreshing candidness, which some might argue has been missing from the telecoms giant for a good many years.
Matthyser is a strategy man, through and through: the “big picture” guy. Not that a plan for a post-deregulation Telkom is difficult to figure out. It’s there for the whole world to see (A blueprint for Telkom’s future).
The diversification into mobile, through Vodacom was the first step for the (then) fixed-line telecommunications company.
The question: ‘Can a telco evolve’ has clearly been on Matthyser and Ngcobo’s minds for many, many months. Matthyser offers a convincing answer to this question.
He cites Telkom’s success thus far and once again points to the environments in maturing markets like the UK, Germany and Australia.
BCX: deal or no deal?
The acquisition of an IT services company (the proposed BCX transaction) is seen by Ngcobo and Matthyser as the necessary next step. Matthyser offers a convincing argument in favour of the deal. “Just look at telcos internationally,” he says, alluding to their diversification into the IT services space.
“What Telkom wants, simply, is the right to compete,” he says, without blinking. He says that this is all the company asks for. Matthyser envisions a “truly South African IT company”. Ngcobo calmly adds that BCX will continue to operate as BCX, much like Vodacom does now – an arm’s length away from the parent. He sees only a small overlap in skills and efficiencies.
The threat to local IT companies, says Matthsyer, are the very strong international competitors (the likes of T-Systems, BT Connect, IBM).
Analysts like Irnest Kaplan, though, still believe the deal will not go through. Many say it will be bad for the entire industry and stifile competition.
Matthyser on the other hand contends it is “absolutely critical” to Telkom’s growth that they move into this space. He cites the fact that corporate customers have shown a clear interest in the services that could potentially result from an enlarged group. He also says they have offered what they believe to be a compelling and economically sensible argument to the competition authorities. Telkom is still optimistic, he says.
But obviously, if the deal is blocked, the company will have to look at alternatives. Ngcobo says Telkom would have “no choice” but to look offshore.
Competition and management
Matthyser offers a straightforward perspective on the licensing of a second operator. He says the introduction of Neotel will make the expectations of South Africans “far more realistic” when it comes to pricing, rollout and service.
He says up until now, South Africans have wanted the “US standard” at “Brazilian prices”. Neotel, he says, will offer a yardstick.
Also, one needs to take the moves towards diversification at the company “against a backdrop”, Matthyser says. Several of the top management have left the company in the past few months. Yet, he says, the share price is performing. He says analysts “have faith” in this strategy and that it has been well-accepted.
A desire to change?
Both of these men speak with passion and belief that Telkom will succeed. It is doubtful a sentence like this would’ve been written about anyone at the company three years ago.
A calm, pensive Ngobo, who has been with the company for almost a decade is excited by the challeges that lie ahead, especially within Telkom Media. A keen golfer, it is doubtful though that he is able to find much time for the game now as he’s currently working two jobs (wrapping up his corporate affairs duties and heading up Telkom Media). Matthyser jokes about the fact that, for the moment, Ngcobo has two offices: one in Pretoria and the other in Centurion.
Matthyser says he’s been at Telkom for 22 years, and will gladly work there for another two decades. One rarely sees this kind of honest commitment in the business world. This isn’t an executive who’s memorised the numbers to please the experts on analysts’ day.
“We’ve worked so hard over the past five years and here we are… just about to deliver.” Ngcobo almost ‘delivers’ this closing statement with a pronounced calmness.
Like Ngcobo who was practising his golf swing on his balcony earlier that morning, one gets the feeling that Telkom’s been practising for years and is just about to come from behind and score an eagle on the ninth. But yet, there is all the history, all the unkept promises, tons of baggage.
Centurion. An unlikely place, but you can actually witness decisions being made in minutes, not months. There seems to be a renewed motivation towards success here. Who knows?
Perhaps the skeptics will be proved wrong.
This column was originally published on Moneyweb.
Evans May 10
Nice work.Telkom is just being as a step ladder to wealth by the ANC.Just do an audit of all ex-Telkom CEO’s,how much are they worth,what assets do they have.
The government owns over 50 percent of shares in Telkom which means it has great control to see how things are done.But you hear Thabo Mbeki tell people that Telkom’s costs are high.Who is he fooling.
Of all the Telkos in the world,Telkom is the only to be still realising profits through landlines.Grrr!