EFF statement on Gigaba intention to sell Telkom assets
24 July 2017
The Economic Freedom Fighters notes the absolutely misguided intention by the Minister of Finance, Mr. Malusi Gigaba, to sell Telkom assets in order to bail out the badly and irresponsibly managed South African Airways. The EFF is of a firm belief that disposal of strategic assets under the ownership and for the benefit of the State is outrightly foolish, irrational and irresponsible. As we clearly illustrated by poorly conceived 14-point plan Gigaba presented, the decision to sell the so called non-core assets is irrational, irresponsible and decidedly wrong. The EFF rejects any such intentions to sell Telkom assets or any assets under the current ownership of the State as such takes away the state's capacity to drive labour absorptive industrial expansion.
Telkom has successfully implemented a turn around strategy that began in 2013, with the new Chief Executive Mr. Sipho Maseko and Chairperson Jabu Mabuza at helm. Today, the state owned ICT company has stabilized, back in profit and is one of the best performing South African companies with a revenue of above R40 billion, stable profits and huge potential to add meaningful value in SA's struggling economy. Telkom resumed to pay dividends in 2015 after a 4-year period in which the company struggled with record losses and share price reaching all time low. Since the resumption of dividends payments, Telkom has contributed more than R2 billion to the national revenue fund in dividends and contributed more than R1 billion in taxes in the 2017 financial year.
The state cannot and should not continue to dispose strategic assets due to its mismanagement of key state-owned companies like SAA. In 2015, government sold its 13% in Vodacom at a value of R29 billion to bailout Eskom. In addition, Parliament approved a legislation to write off Eskom debt worth R60 billion. However, the recently released preliminary results shows that Eskom is in no better position than it was in 2015 when the state poured billions in bailout. In fact, due to corruption, mismanagement and looting of Eskom billions by Dr. Ben Ngubane, Mr. Brian Molefe and the Gupta cronies, it is reported that Eskom has enough cash to last for only 3 months and need another government bailout. Eskom is proof enough that the state cannot sell off strategic assets to bailout mismanaged SOCs, in particular SAA, which has the corrupt and incompetent Dudu Myeni as its chairperson.
There are deeper problems in SAA, centered on the arrogance and incapability of the delinquent director, Dudu Myeni and no amount of money will solve the crisis she caused. Throwing money at the SAA financial crisis will not solve its problems. State owned companies can and should be run in an efficient and prudent way, and not subjected to bail outs on a constant basis. State owned companies are expected to contribute to the national revenue fund, and not be instruments to drain the fiscus in the manner ESKOM and SAA are doing.
Given that the other major shareholders at Telkom are United State (US) and European Union shareholders, it is totally irresponsible and irrational to trade off a strategic asset such as Telkom to private hands or pension funds, whose mode of profiteering does not bring immediate benefits to the people of South Africa. The EFF is further extremely concerned by the impact sale of any of its 39% stake at Telkom severely impact the country’s economic and strategic sovereignty. Telkom is a strategic asset that handles sensitive security and strategic communications for the country's security forces and the broad public. It is therefore not wise to dispose of such strategic asset as such will be a direct affront to our country's sovereignty and stability.
If Telkom assets are sold to private bidders, South Africa will not be able to transform the communication industry, lower the cost of communication and build much needed rural and township infrastructure without first consulting foreign based shareholders who’s interest is nothing more than quick profits. Telkom should not be sold to anyone.
The EFF again calls on government to desist from stripping South Africa of its strategic and much needed assets to lead industrialisation. The EFF will write to the Speaker and the Chairperson of the Standing Committee on Finance to call on Parliament to instruct government to stop selling off state assets. In addition, the EFF will further demand that an Ad Hoc Committee be established to look into the impact the sale of state assets. Malusi Gigaba and all the looting band that appointed him into the Finance Ministry must respect South Africa's economic sovereignty and desist from actions that will result in government being nothing, but a spectator on all all economic issues.
Issued by Mbuyiseni Quintin Ndlozi, National Spokesperson, EFF, 24 July 2017
