South African ruling party the African National Congress (ANC) is expected to decide on the future of the country’s fixed line operator, Telkom, at its electoral conference this weekend.
The South African government owns almost 40% of Telkom, while state-owned Public Investment Corporation (PIC) has a 10.89% stake in the firm.
And the country’s government has touted possible plans for what it intends to do with the telco, including renationalisation and delisting the operator from the Johannesburg Stock Exchange (JSE).
Possible plans for Telkom could then come to the fore at the elective conference in Mangaung in the Free State province, where the ANC is expected to elect party leaders ahead of the national government elections in 2014 and make economic policy decisions.
“Our part is to ensure that, policy-wise, we are on the right track and provide the platform for the board to take decisions that will help them to change the situation of Telkom," South African minister of communications, Dina Pule, told the Business Day.
The move to decide Telkom’s future at a political gathering comes at a critical time for the company, as its business is under pressure.
The firm this year recorded a 10.2% decrease in voice usage among its 181,000 fixed line subscribers.
In the interim results for the period ended September 2012, Telkom’s year-on-year revenues also fell by 1.5%. Its earnings before interest, taxes, depreciation and amortisation (EBITDA) decreased by 17.7%, while its headline earnings were down by about 80%.
Dobek Pater, senior telecoms analyst at Africa Analysis, has told ITWeb Africa that whatever policy the ANC adopts for the Information, Communication and Technology (ICT) sector, Telkom will fall close in line with that strategy.
However, he does say that experts could only speculate about what government’s future plans for Telkom are.
“All we can do is speculate about what may happen to Telkom as an entity; the only people who know exactly what will happen to Telkom are people who are directly involved in the discussion processes,” he said.
“What we know at this moment is government’s proposed plans, which is broadband for everyone and internet penetration by 2020 for instance.
“We’ve got no idea how government actually intends to achieve that,” Pater explained.
Pater, though, has said that the renationalisation of Telkom could be unlikely.
“From our perspective we don’t think Telkom will be renationalised – we certainly think the ANC will make sure that Telkom’s strategy is more in line with government strategies and it’s just a matter of how does the government see Telkom playing that role,” he concluded.
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