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Telkom’s future after a series of challenges

    Home Featured Telkom’s future after a series of challenges
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    Telkom’s future after a series of challenges

    By Telecomspeak | Featured, Opinions | 0 comment | 28 May, 2013 | 1

    Telkom has been going through a rough time of late, last week saw their share price hit a 10 year low when it slumped to R12.28 a share.

    This more than 40% fall is the result of knock after knock that the company has been receiving in the past year.

    It started last June when a deal with Korean based KT Corporation fell through. The telecommunications giant was negotiating for a 20% stake in the company in return for a R3.3 Billion cash injection. The deal however was rejected by government who hold a 49,9% stake in Telkom.

    The binning of the deal caused the stock to plummet 12%. They then dropped again a few weeks later when Telkom agreed to pay a R449m fine to the competition commission and fell a further 3% when CEO Nombulelo Mohol resigned in November last year. This was followed by four independent directors being voted off the board when communications minister Dina Pule withdrew her proxy votes. Two other directors stepped down at the meeting, leaving the board without quorum.

    On top off all this profits have been lagging as the company has been struggling to make a success of its mobile business, which is yet to see a profit after two years of operation. They have also had to absorb the major cost of a failed attempt at expansion into Nigeria.

    The question now is can Telkom turn it around? With such a large overhaul at the top, and accusations of government meddling that is doing far more harm than good, Telkom appears ripe for a revival.
    The new CEO Sipho Maseko took the reins on the 1st of April and Brian Armstrong the former head of Telkom business took the position of chief operating officer. They have also just announced that Dr Miriam Altman will become head of strategy as of the 1st of June. By all accounts these are intelligent, market savvy and qualified people. It is now up to them to turn it around.

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