Telkom subsidiary BCX — whose revenue declined in the six months to September as corporates and the government reduced information and communications technology (ICT) spend — plans to simplify its structure and sell certain assets, management said on Friday.
"Businesses that are nonperforming and also noncore have gone through a portfolio review, and we will be looking to find the most sensible way of disposing of those businesses," said Telkom CEO Sipho Maseko.
BCX sold ICT training firm Netcampus in September, while the ICT services provider plans to sell NGA Africa, Appzone, BCX Kenya and BCX Botswana by September 2018.
Maseko said BCX "did not really show up in the right way … although that’s more of a timing issue than a structural issue — it’s the deferral of spending by the private and public sectors".
While BCX and the group aimed to reduce costs as revenue stalled, BCX has no plans for forced retrenchments, CEO Ian Russell said. The company has about 10,000 staff in SA and other parts of Africa.
Russell said BCX would simplify its organisational structure, which is made up of 34 separate legal entities, by grouping similar divisions.
BCX’s operating revenue fell 4.8% to R10.8bn in the first half, dragging group turnover 0.6% lower to R20.1bn. Telkom shares fell to their lowest level since October 2014 on Friday, closing 6.4% down at R50.50.
Maseko said Telkom’s strong mobile business performance "was able to offset essentially the decline on the fixed-voice side".
"This company has depended on fixed voice for a long time, and we are in the process of migrating from fixed voice to broadband, data and IT."
Mobile data revenue grew by 59.8% to R1.6bn in the six-month period, with subscriber numbers up 25.2%.
Maseko said that Telkom was constrained by spectrum allocations. Spectrum should be distributed equitably.
"We are the only player that doesn’t have sub-1GHz spectrum. We think that that almost distorts the competitive environment. If we have 2100MHz, we shouldn’t get more of it, and because we don’t have sub-1GHz spectrum, that’s what we should get. There needs to be an equality-based philosophy in allocating spectrum."
Regarding the state’s mooted sale of at least part of its 39.3% holding in Telkom, Maseko said conversations with the government suggested that it had identified "a potential buyer or two".