19 November 2012

South Africa: Telkom Focuses on Management Stability

Pretoria — Telkom's outgoing Group CEO Nombulelo Moholi says the company is intensifying its focus on its short term priorities to ensure management stability and to see to it that the company achieves its business priorities.

She said it was also essential to ensure that customer service was not impacted by recent events at the corporate level, and that ongoing constructive dialogue with minority and majority shareholders continued.

Announcing the Group's Interim Results for the six months ended 30 September 2012, Moholi said results for the half-year to September 2012 reflected the ongoing challenging environment for fixed-line incumbents.

Revenue declined marginally by 1.5% to R16.1 billion and operating expenses increased by 1.6% to R15.6 billion. Basic earnings per share decreased by 64.5% to 30.2 cents.

However, there were several areas of improvement recorded in the six months under review, including that ADSL subscribers increased by 5.8% to 841 831, and calling plan subscribers increased by 5.7% to 843 491, among others.

Moholi said Telkom had reached a pivotal crossroad.

"We are confident that the headwinds we face can be overcome. Telkom is engaged in constructive dialogue with its key stakeholders to chart a successful way forward," she said.

The company remained focused on achieving its current business strategy.

Moholi has indicated her intention to step down from the role of GCEO in six months. At Telkom's recent annual general meeting, four non-executive directors were not re-elected to the board by a majority of shareholders. The board has been reconstituted with the appointments of Jabulane Albert Mabuza, Kholeka Mzondeki and Leslie Maasdorp.

The board had also elected Mabuza as the chairperson. The next step in the process would be the appointment of more directors and board committees.

The company's key business priorities include achieving leadership in data; growing Telkom Business revenue by diversifying its service portfolio; regaining competitiveness in the consumer market; consolidating Telkom's position as the wholesaler of choice; focusing on profitable market segments and services, and enhancing the company's operational efficiency.

Moholi said Telkom's future performance was hinged on the company's ability to address several key issues, including filling an execution capability gap; resolving the future of the fixed-line business; an inappropriate termination rate regime; a rigid cost structure; regulatory obligations and government engagement.

She said Telkom was determined to strengthen its competitiveness, improve its operating model and manage its financial resources carefully.

"We are taking action to ensure that we execute our strategy to build a stable, healthy company going forward," she said.

"In line with this commitment, engagement with government and all other stakeholders is critical to charting a successful way forward."

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