/ 17 January 2007

Reuters chief executive criticises Telkom

Telkom came under fire this week after international news agency Reuters criticised the company for high telecommunications prices and low-quality bandwidth.

Reuters chief executive Tom Glocer told Business Day newspaper that while his company had been expanding in countries such as India, he was reluctant to do the same thing in South Africa because of Telkom’s high prices and “flaky” bandwidth.

Reuters is one of the 100 largest companies listed on the London Stock Exchange. Reuters and Bloomberg are the two largest global financial-information providers, supplying data to banks, traders and governments.

Glocer told the paper that while Reuters had extensive business interests in Africa and was attracted to South Africa’s sophisticated financial markets, telecoms services “are far more expensive here, and the available bandwidth is flaky”.

Business Day quoted research from economist and telecoms consultant Paul Cole that showed that local consumers are paying 440 times more than they should for voice and data calls and that Telkom sells bandwidth at a 700% mark-up.

Speaking to the Mail & Guardian Online on Wednesday, Cole said that Telkom’s monopoly is an indication of a failed market and policy.

Telkom said on Wednesday it is “committed to the process of consistently adjusting its pricing model in order to make telecommunications more affordable and accessible to business as well as the broader South African public”.

Cole said Telkom’s statement is true, but irrelevant. “What gives Telkom the right to set the price? They should be adjusting their prices according to competition in the market.”