WikiLeaks: Sensitive info about Telkom revealed

A recently released WikiLeaks cable revealed sensitive information involving Telkom and AT&T, with the US telecoms giant criticising the slow pace of Telkom decision making

Former Telkom CEO Reuben September and AT&T business solutions president Ron Spears signed a memorandum of understanding (MOU) in 2009 which promised better services and lower prices.

A US diplomatic cable leaked by whistle-blower website WikiLeaks, flagged as “sensitive but unclassified,” said Spears explained that South Africa was an important entry-point for AT&T’s business in Africa and that AT&T’s strategy in SA would be to find good partners to grow its business.

This included partnership opportunities outside of Telkom, the cable quoted Spears as saying.

High expectations

Continuing to quote Spears, the cable went on to say that AT&T decided to revive its partnership with Telkom because of Telkom’s breadth and depth of experience in Africa. The timing was good for a partnership as Telkom had to begin adjusting to a more liberalized ICT [information and communication technology] market in South Africa.
The cable highlighted the ending of Telkom’s “restrictive relationship with mobile operator Vodacom” and its search for a buyer for “its ill-fated Telkom Media subsidiary.” According to the cable, proceeds from the Vodacom sale would have allowed Telkom to pursue its strategy of further expansion into sub-Saharan Africa, which would increase its value as a partner for AT&T.
One can’t help but wonder what effect the poor showing of Telkom’s Multi-Links business in Nigeria may have had on this partnership.

Memorandum of Understanding

According to the cable, Spears and September signed the MOU on the afternoon of 16 April 2009. This was followed by an announcement to the press.

Though operational details were yet to be finalised, the cable said that the MOU would allow companies based in Sub-Saharan Africa to connect to other global markets more effectively and permit U.S. companies to connect more easily with their subsidiaries and clients in South Africa.

The partnership was lauded as a win-win for both companies, the cable added, saying that partnering with AT&T would allow Telkom to leverage AT&T’s network and would also allow Telkom to meet the infrastructure requirements it has agreed to provide FIFA for the 2010 World Cup.

AT&T frustrated with slow pace of Telkom decision-making

Spears expressed frustration at the slow pace of Telkom decision-making, the cable said.
While Spears was optimistic about the renewed partnership, the cable said that he would have to pressure September to begin finalizing the details of the arrangement. Spears noted that AT&T had hoped to have more concrete plans for the partnership finalised by the time of the April 2009 MOU signing, but had been thwarted by the delays in Telkom decision making.

Media representatives at the signing of the MOU also “bombarded officials for additional details regarding the partnership,” the cable said.

According to the cable, Spears said AT&T was ready to move forward with implementation, but felt frustrated at Telkom’s inability to finalize decisions. A follow-up trip was planned for June 2009 and Spears hoped to finalise details before the trip, the cable said.

Telkom’s willingness to engage AT&T in a new partnership is reflective of the pressure South Africa’s incumbent telco is beginning to face under an increasingly liberalized ICT market, the cable quoted Spears as saying.

However, the prolonged negotiations reflect Telkom’s slowness in embracing this change.

Partnership a benefit to consumers

The cable concluded by saying that the proposed AT&T and Telkom partnership would benefit African ICT consumers and would complement other developments in the ICT sector including the addition of new fiber-optic bandwidth capacity (referring to the imminent landing of Seacom, with WACS on the horizon).

However, trade union activism and the slow pace of ICT liberalization could hamper final decision-making on the partnership and potential areas of cooperation, the cable said.

Telkom was asked for comment on the cable’s statements about slow decision-making from the operator and the operational detail of the MOU, but did not respond by the time of publication.