SOUTH AFRICA'S TELKOM TO EXIT NIGERIA'S CDMA MARKET
750 jobs hang on the balance
SOUTH Africa's Telkoms- the majority stakeholder in MultiLinks Nigeria, yesterday, announced its plans to pull out of the Code Division Multiple Access (CDMA) business in the country.
The exit plan, according to Telkom, was informed by the various losses it recorded in its operations in the last financial year.
Between January and June this year, statistics obtained from the Nigerian Communications Commission (NCC) revealed that the CDMA operators in the country, including Starcomms, Multi-Links Telkom, Visafone, Reltel lost over 1.8 million subscribers within the period.
Speaking about the pullout yesterday, in Lagos, the Acting Chief Executive Officer of Multi-Links Telkom in Nigeria, Mr. Vincent Raseroka, said the resolve to exit the Nigerian market was purely a business decision.
He said: 'It is strategically, financially and commercially challenging for us to continue to do business in this segment. With a current market share of 2.6 per cent in a market dominated by the GSM technology, it has become imperative that we explore other options and chart a new path to growth and profitability for ourselves as a business, by utilising our fixed infrastructure here in Nigeria.
'Additionally, a number of contracts have rendered Multi-Links Telkom's CDMA business unprofitable and unsustainable.'
He explained therefore, that the company was committed to reducing costs in a manner that ensures sustainable long-term benefits.
Raseroka explained that the company has a small market share in a challenging environment; made little progress on reducing costs on long-term contracts among other challenges.
He added that Multi-Links' mobile business was not currently profitable and will take time and substantial further investment to turn around.
'To this far, the Telkom Group Board has mandated management to review options for the exit of the CDMA business. We have received a number of expressions of interest, which will be evaluated and quantified over the next quarter. We have been given up to the next four months to get new investors into other segments of our business.
'We shall maintain our fixed services, which we think is the only one performing to expectations for now.'
According to him, the most painful thing about the whole issue was the case of about 750 employees with the company.
He said the company's challenge now lies on how to still accommodate their employees. He revealed that already, 11 expatriate workers would leave within the next one month.
Also speaking, the spokesperson for the Telkom Group, Zeona Jacobs, also revealed that the parent company has mandated management to review options for the exit of the CDMA business in Nigeria, saying, 'a number of expressions of interest have been received from local and international industry players and these would be evaluated and quantified appropriately before a final decision is reached on the myriad of options open to us.
Telkom's Acting Chief Executive Officer, Jeffrey Hedberg, in a statement released in South Africa yesterday outlined plans to stabilise the group in business.
He said: 'It is essential to stabilise the business by allocating our resources more efficiently.'
He disclosed that the group is doing so by exiting the CDMA business in Nigeria, closing down non-strategic parts of the business and focusing its international activities primarily on corporate customers.
According to him, this will enable the group focus and allocate capital more efficiently to those areas of the business that deliver a customer solution and drive revenue growth and margin.
This development has no doubt turned Multi-Links Telkom into the beautiful bride of the industry within and outside the shores of Nigeria with the company's ownership of the highly sought-after optic fibre cable transmission network reckoned to be one of the largest in Nigeria and estimated to be over 8,200 km.