South Africa - Telkom has a five-point strategy for its turnaround including broadband and repositioning in Nigeria

[itweb] Ailing fixed-line operator Telkom may be set for recovery if acting CEO Jeffrey Hedberg's five-point strategy is successful.

At first glance, the plan of action may appear timid, but industry insiders describe it as succinct, meaningful and valid.

Telkom has been in a slump after reporting just more than flat revenue growth at its last financial results; a situation that was further compounded by an exodus of top talent, including CEO Reuben September and CFO Peter Nelson.

But Hedberg, who has been famed as a turnaround specialist, yesterday stated that Telkom would no longer be defined by a set of individuals, but as a team. He added that his focus for the company's turnaround would be driven by five guiding principles.

Plan of action

The first marker in Hedberg's plan includes a focus on leadership and organisation. He says the company's focus will be on driving clarity and communication to achieve better alignment throughout Telkom.

Hedberg will prioritise a revival of culture throughout Telkom and develop a plan to recruit the best people into the company.

But Chris Gilmour, Absa Investments analyst, says Telkom will struggle to attract good people with all the controversy surrounding the recent departures of the CEO and CFO. Telkom will have to pay up to attract talent and prospective candidates will demand watertight contracts over a period of no less than three years, he predicts.

Hedberg explained that these objectives would be guided by transparency and encouragement to challenge the status quo.

Ebitda (earnings before interest, taxes, depreciation and amortisation) and cash flow improvement is the second key point of Hedberg's strategy. He said Telkom's cost-cutting initiatives were on track, but the company would also be focused on increasing revenue going forward.
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The imminent launch of Telkom Mobile is Hedberg's third priority. He noted that he sees great potential in getting the operation off the ground and offering bundled fixed and mobile offerings.

The fourth point of Hedberg's strategy was his emphasis on the operator's broadband offering. He noted that Telkom's broadband offerings will be one of the company's key differentiators going forward, not only with ADSL, but also in future mobile broadband offerings.

Lastly, Hedberg acknowledged that he would be focused on the repositioning of Multi-Links. Telkom initially invested in the Nigerian company in 2007, but the unit has been a disappointment since it joined the Telkom stable. So far, Telkom has written down Multi-Links by R5.6 billion, which is a third more than the company paid for the Nigerian operator.

Earlier this year, Telkom hinted that it may be exiting the failing operation, but Hedberg noted yesterday that would lead to a case of buying in high and selling low. Now his strategy includes holding onto its loss-making subsidiary.

Hedberg outlines Telkom turnaround plan