Telkom works out plan to boost black ownership above 30%
The telecoms company wants to reach the target without diluting existing shareholders
Telkom is working on a plan to boost its black ownership above 30% and the telecoms group wants to reach that target without diluting existing shareholders, says CEO Sipho Maseko.
Regulators have floated the idea that mobile operators must be at least 30% black-owned to bid for spectrum — a requirement that most in the industry currently fall short on.
Market leader Vodacom, for instance, has black ownership of about 20% after completing a new empowerment deal.
In the year to March, Telkom raised its black ownership from 14.3% to 24.4% thanks to the growth of the group’s employee share scheme, which Maseko introduced in 2013 shortly after his appointment as CEO.
"We constantly look at the imperatives for us to be a credible market participant, and the 30% BEE [black economic empowerment] ownership [hurdle] is one of those," Maseko told Business Day on Friday.
"I think we’ve got solid plans around making sure that we reach that 30% designation — hopefully without having to dilute our existing shareholders. I had hoped that by now we would be making an announcement, but we’re close."
Maseko said Telkom had been focusing on "bringing stability to the shareholder base" and on "evolving an ownership model" that would not affect existing investors.
"Ideally what you’d want to do as well is to have [black ownership] as broad-based as you possibly can, but I think the model that we have has worked so far – give staff members an opportunity to own shares, but then they need to work for those shares and deliver value to shareholders that offsets whatever value degradation would have been there for [existing] shareholders in the first place."
Maseko said Telkom was also considering a new organisational structure that would require the "divisionalisation" of business units and a shift from a vertically integrated group structure to a more horizontal model. Until now, Telkom had operated as "one monolithic company". The group would shift from "product-based segmentation to what I’d call platform-based segmentation" in order to be more competitive.
The project would also include a redesign of Telkom’s information technology systems, whereby certain processes could be replaced by artificial intelligence or robotics.
The organisational shake-up was aimed at boosting profitability and "serving customers a lot faster. Now the platform is stable, and we are therefore trying to say, ‘How do we begin to set up an operating model that prepares us for the 2020s?’"
Maseko said Telkom’s Gyro property business was becoming a "more significant" revenue contributor. Telkom said in May that within its vast property portfolio — which has an insured value of R24bn — it had identified about 40 properties that it wanted to develop in partnership with real estate groups.