PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA
NATIONAL ASSEMBLY
WRITTEN REPLY

QUESTION NO:  309
DATE OF PUBLICATION: 18 February 2011
QUESTION PAPER NO: 02
DATE OF REPLY: 22 July 2011

Mr NJ van den Berg (DA) to ask the Minister of Communications:

(1) What are the reasons for Telkom's failed efforts to gain ground in the Nigerian telecommunications market;

(2) Whether Telkom suffered a financial loss through these efforts; if not, what is the position in this regard; if so, (a) what are the reasons for suffering a loss and (b) what are the relevant figures?

NW333E

REPLY:

(1) Telkom has not yet succeeded in Nigeria primarily because it acquired a CDMA operator in a market which is dominated by the lower cost 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. Some unbeneficial contracts were entered in to which did not deliver the anticipated benefits and incurred significant operating expenses. The worldwide economic troubles also affected 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.

(2) (a) the reasons for the loss have been outlined below

(b) Telkom's Multi-Links unit suffered an operating loss of R522 million for the financial year ended March 31, 2009 and R 1,039 million for the year ended 31 March 2010.

In addition Telkom has been required to write down goodwill and assets of R5 823 million.

Issued by Parliament, July 25 2011

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