File image: IOL.

CAPE TOWN - In a bid to cut down on costs, telecommunications provider, Telkom has announced plans to terminate a number of outdated services, including public payphones, reports Business Tech. 

This comes after Telkom’s consumer business head, Attila Vitai, on Thursday said in an interview with the Financial Mail that the move is part of the company’s re-positioning as provider of data-based communication services. 

Pay phones were proving to be uneconomical in the current environment, said Vitai. 

However, the move to depart from payphones is subject to Icasa and government’s approval. 

Although payphones are an added expense for the company, a few locations will still have payphones within the next six months. This is because the company is bound by certain regulations which condition Telkom to provide payphones as a community-service component. 

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Meanwhile, Telkom has called on government to be disciplined in the way it disposed of its stake in the group. 

Government’s move resulted in Telkom’s share price shedding more than 6% last year after rumours circulated that government wanted to sell its stake in the company. 

The share price took a drubbing of 6.39% on the JSE in November last year. 

Telkom chief executive, Sipho Maseko, said that Telkom’s management was not in control and could not dictate to shareholders, including the government, what to do with their shares, but that the government had promised to be disciplined in their approach.

“Whether the government decides to dispose of its stake partially or fully, we ask that they are thoughtful about how they do it in a way that is disciplined and organised whatever is done must be able to advance the strategic agenda of the company,” Maseko said.

Government’s disinvestment in the telecoms group was announced in October last year when Finance Minister Malusi Gigaba said that the government would sell its stake in the company to meet budget requirements, as expenditure was estimated to overshoot its targets by R3.9 billion.

The minister, however, did not disclose how much of the government’s stake in Telkom would be sold, stating only that a “portion” would be sold. Last year, government had a 39.76% stake in Telkom, whose market capitalisation was just under R27bn.

However, Gigaba had in his Medium-Term Budget Policy Statement speech expressed qualms about being forced to sell a portion of its stake in the firm to assist the nation's fiscus.

“We do not take this decision lightly, but we have had to in order to maintain the credibility of the expenditure ceiling,” Gigaba had said.

Telkom’s total revenue for the six months under review declined by 0.6% to R20bn, while the company’s headline earnings per share decreased 7.4% to 303.9 cents in that period.


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- BUSINESS REPORT ONLINE