The South African Information and Communications Technology (ICT) space saw a major shake-up last week, after mobile operator MTN South Africa announced it was in talks to buy Telkom.
Both companies said the discussions were about MTN acquiring the entire issued share capital of partially state-owned telecommunications provider, Telkom, in return for shares or a combination of cash and shares in MTN.
The companies said the discussions were at an early stage and there was no certainty that the transaction would be consummated.
If the deal goes through, this means MTN will have to buy out the government as it holds a 40% stake in Telkom, while the Public Investment Corporation (PIC) owns a further 14% of Telkom’s equity.
The National Union of Metalworkers of South Africa (Numsa) has come out and said it condemns any plan to privatize Telkom.
“Telkom is a state-owned enterprise (SOE) and government the shareholder currently owns a 40.5% stake in it. It is currently the country’s biggest telecommunications provider. As of 2020 it had overtaken Cell C to become the country’s 3rd largest mobile operator. We are opposed to any privatisation of state owned companies. We have consistently warned about the dangers of privatisation and the dire impact this would have on the working class and the economy,” Numsa said in a statement on Wednesday.
Numsa went on to state that Telkom has a developmental role to play in the South African economy.
“South Africa is a poor country of more than 46% unemployment. We are the most unequal country in the world. If we are to grow the economy, and the ICT sector a whole, we must influence ICT policy and we must have a state-owned telecommunications company which will implement government policy,” Numsa further said.
“If Telkom is privatised its developmental agenda will be nullified. The private sector does not care about creating access to communities and the working class. It has no interest in BBBEE and empowering communities. They care only about profits,” Numsa said.
Numsa says Ramaphosa has ties to MTN
“We have seen how the ANC-led government has ensured that privatisation of SOEs benefits those who are politically connected to the leadership. SAA in its heyday provided over 40 thousand jobs across the value chain. It contributed massively to the tourism and hospitality sector, many businesses collapsed as a result of its radical restructuring. It was sold for a mere R51 to the Takatso Consortium, in a deal which is shrouded in secrecy,” Numsa said.
The union went on to say that if this deal goes through, members of the ANC elite will benefit.
“After all, Cyril Ramaphosa was the chairperson of MTN from 2001 to 2013, before becoming president of the country. Ramaphosa has made it his mission to sell all our state assets to private capital at the expense of the working class. We have seen this at Eskom as well where energy generation is privatised through the IPP’s. This is clearly part of the ANC’s privatisation agenda,” Numsa stated.
Numsa went on to list the below reasons on why the union is against the sale of Telkom to MTN:
- If Telkom is privatised the consumer will pay more. This has certainly been the case at SAA where the restructuring of the airline and downsizing of subsidiaries like Mango has dealt a major blow to low-cost domestic airfares in South Africa. It costs a fortune to fly inter-provincially because the aviation space has shrunk dramatically. SAA and its subsidiaries should have been given greater support and increased government investment in the face of a raging global pandemic. That is how the rest of the world reacted to Covid-19. However, this government took a senseless decision to privatise and now the private sector has a total monopoly on airfare costs, and it is now very expensive to fly. At Eskom, the management confirmed to Nersa that part of the reason the cost of electricity is so high, is because of the privately owned IPPs whose exorbitant costs are passed onto the consumer. Therefore, it cannot be correct for MTN which is already a monopoly in the telecommunications space, to be a beneficiary of this transaction. They will dominate the sector and swallow up all the other players in the space. This will inevitably lead to higher prices which will not benefit the nation as a whole.
- Telkom is key driver of the 4th industrial revolution and privatisation means it will be unable to fulfil this agenda. MTN and Vodacom are not interested in serving rural areas and outlying communities. Their focus is on improving the network in urban areas. Only a state-owned entity like Telkom can drive an agenda to ensure that the entire country has access to telecommunications services and particularly rolling out 5G across the whole country, at an affordable rate for the working class, and also for small and emerging business.
- Telkom currently trains high numbers of artisans for the telecommunications space. This contributes meaningfully to the growth of the economy and skills creation for the ICT sector. These programs will end if Telkom is privatised. We experienced this at SAA Technical following the extreme restructuring which took place recently. SAAT used to train aviation engineers and because it was a SOE, it created a pool of black aviation engineers, who, would ordinarily would not have had the opportunity to get the experience, because most aviation schools are privately owned and very expensive. Now that SAAT is a shell of its former self, it is unlikely that it will play such a critical role in skills development in the future.
- We reject the narrative that because there are challenges in SOEs, right-wing economists encourage privatisation. Our SOEs have been deliberately collapsed and sold to the private sector. China has embarked on a radical program to industrialise and create jobs and it relies on SOEs. They are showing the world that SOEs can be a success story. What is needed is political will. There is no political will to invest in our SOEs and no political will to make them viable. The agenda is to collapse them deliberately, like they have done to Eskom and SAA, and sell them to the private sector.
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