Official opposition communications spokesperson Dene Smuts says Telkom is disingenuous when it argues that its profits were not only derived from revenues but also cost savings.
Telkom, which appeared before the parliamentary communications committee on Friday, argued that fixed line profits were the product of cost cuts. It argued that fixed-line revenue rose only 4,6% from increased prices and volumes.
The Democratic Alliance called for price cuts in the wake of the announcement of big profits.
Smuts said in a statement that Telkom’s remarks only strengthen the argument “that the productivity factor in the CPIX formula [CPI minus productivity] should be raised”.
“Once this brings prices down, volumes may indeed rise, resulting in better revenue. Telkom’s fixed-line penetration to only 10% of our population is really not good enough.
“Telkom also tried to argue that it was not responsible for tariffs which are set by regulation, but this is unpersuasive. Telkom took Icasa to court when the regulator tried to increase the X factor to 3% in 2001 for the 2002 calendar year.
“I reminded Telkom today that Thintana [the two foreign shareholders SBC and Malaysia Telekom] went on record early in 2001 as saying the productivity X factor should be in the range of 2% to 2,5%. This makes all the more compelling the question why the government — as the other shareholder and final arbiter of all telecoms regulations — pegged the productivity X factor at 1,5% when it forced Icasa to back down. Local calls rose by nearly 24% as a consequence.
“Productivity is improved by technology and by line-per-employee cutbacks. Telkom has reached 149 lines per employee, a hundred short of the benchmark.”
Smuts said that the Congress of South African Trade Unions’ argument that this ran counter to job creation was wrong.
“Lower phone charges will contribute to the economic growth which is the only sure way to create jobs. In addition, Telkom’s reskilling and career opportunity agency really is a model for social responsibility.”
Smuts said she welcomed the fact that a number of ANC MPs “joined us in challenging Telkom on prices”. — I-Net Bridge