Telkom is privately thriving, so loosen up Eskom and SAA
Results for the year to end-March show the benefits of competition and private-sector participation
Telkom has once again proven itself to be a model state-owned enterprise (SOE). With many of its public-sector peers on the brink – most notably debt-laden Eskom – Telkom’s financial results for the year to end-March show the benefits of competition and private-sector participation.
The group said on Monday it made a profit after tax of R3.3bn in the year, an 11.5% increase. Service revenue from its mobile business, which is fast taking market share from the incumbents thanks in part to competitive pricing, surged 58.3%. It saw 85.9% growth in active subscribers, to 9.7 million customers.
Telkom is hardly an SOE these days – the government only owns about 40% of the network operator, which operates independently of the state and is answerable mainly to private shareholders. And unlike many other SOEs, which can be complacent as they have no real competition, it has to take on formidable competitors and is therefore forced to stay on its toes.
This presents a compelling case for the state to open up SA’s national electricity grid to private investors, for instance. And when other SOEs such as Eskom and SAA are on their feet, selling majority stakes to the private sector could make sense.
Telkom also revealed that it owns 1,970ha of land, including a 844ha vacant plot at Klipheuwel and another 439ha plot at Hartebeeshoek. With the ruling party moving towards the expropriation of property without compensation, and considering that it is eyeing state-owned land in particular, Telkom may be concerned that its real estate could be in the firing line.