25th July, 2011
South African Communications Minister Roy Padayachie says that Telkomâ€
He was responding to a written parliamentary question by the Democratic Allianceâ€
Van den Berg also asked whether Telkom suffered a financial loss through these efforts.
Padayachie replied Telkom had not yet succeeded in Nigeria primarily because it acquired a code division multiple access (CDMA) operator in a market dominated by the lower cost global system mobile (GSM) technology.
Also, the rapid expansion of the network that had to be implemented could not be supported by the underdeveloped distribution channels, thus affecting sales revenue, he said.
Some contracts were entered into which did not deliver the anticipated benefits and incurred significant operating expenses. The worldwide economic troubles also affected the Nigerian economy.
Multi-Link did not have sufficient market share, pricing power or strategic and operational advantages to be successful in the resulting tight economic environment.
Telkomâ€
“In addition Telkom has been required to write down goodwill and assets of R5.823 million,†Padayachie said.
Replying to another question — by Juli Killian of the Congress of the People — he said as one of several shareholders in Telkom, the government raised its dismay at the write-off of “approximately R5.2 billion in the Nigerian operation at the Telkom AGM in 2010.
“Telkom underestimated the highly competitive nature of the Nigerian telecommunications market and also failed to build and manage appropriate distribution channels,†he said.
The government, represented by the minister, had 38 percent shares in Telkom with no special rights.
On the drastic erosion of the value of Telkom shares, and whether the government intended giving the company a cash injection from state coffers, Padayachie said Telkomâ€
“Telkomâ€
Telkomâ€
“The value of Telkomâ€
About half the proceeds thereof was returned to Telkomâ€
—Daniels Ekugo/ with Agency report