Telkom messed up, CEO admits
Chief financial officer says the management team needs to stay "calm, focused and determined". By Duncan McLeod.
Telkom CEO Nombulelo Moholi admitted that the telecommunications group had made a hash of its investments elsewhere in Africa. “A lot of the investments we made we shouldn’t have made,” she told analysts and journalists in Rosebank, Johannesburg.
The group’s investment in Nigeria’s Multi-Links turned into a financial disaster. It’s estimated the telecoms operator lost at least R10bn through that investment, before being forced to cut its losses and run. The decision to invest in Nigeria was made by former CEO Papi Molotsane, who was later fired.
“Wrong decisions were taken,” Moholi admitted. “But Telkom continued to pump money into an area it shouldn’t have. It has happened and we have taken the beating from it.”
She added: “Management in the past has not had the credibility to deliver on its promises. We reached the decision we needed assistance from a strategic equity partner to fill in gaps … and also offer opportunities for growth. We have suffered a setback in that strategy.”
Cabinet last week said it would not vote in favour of a proposed deal to sell 20% of Telkom’s equity to Korea’s KT Corp for more than R3bn.
Telkom chief financial officer Jacques Schindehütte said the money Telkom would have received from KT Corp would have seen it through its requirements over the next three years. He said ratings agencies and investors would have “found comfort” if the group had been able to raise the additional capital through the Korean investment.
“It would have allowed Telkom to keep the debt level to a comfortable level,” he said. “Without KT, there is certainly no reason for panic [but] we will need to find an alternative to find the required expertise.”
Schindehütte said Telkom’s net cash position was healthy. But, he said, Telkom was “disappointed that not everyone saw that the KT deal would have improved the company’s prospects in a material way. It’s up to us now to stay calm, focused and determined.” — (c) 2012 NewsCentral Media