A CRITICAL EVALUATION OF THE STRATEGIC CHOICES OF TELKOM AND

WHETHER THEY ARE APPROPRIATE OR NOT

According to Grant (2010:23) an organisation strategy can be identified or located in

three places: in the heads of the chief executive and senior managers, in their

articulation of strategy speeches and written documents and decisions through which

strategy is enacted. From the Telkom view, the strategy statements can be identified

in its vision, mission and values. These are as follows:

Vision

To be Africa’s preferred ICT Solutions provider.

Mission

To be a leading South African-based international ICT services group focused on

long term sustainable profitability through growth in existing new markets.

Values

Continuous performance improvement

Honesty

Accountability

Respect

Teamwork

Strategic choice is the third logical element of the strategy formulation process. It

therefore entails identifying options, evaluation of options and selecting a strategy.

According to Boojihawon and Segal-Horn (2010) the process of strategic choice

requires managers to identify several potential options, evaluate them and select the

most appropriate for his or her organisation and context.

Viney and Gleadle (2010:7) argue that in defining organisational objectives and

implementation of selected strategy, comes the identification, evaluating and choice

of strategic options, based on the analysis of external and internal data.

Therefore, in evaluating the strategic choice of Telkom, the discussion will firstly look

at its strategic objectives/intent and secondly, evaluate its recent strategic decisions

it has taken as a result of those objectives.

The aim of Telkom is to continue to strengthen their position as a communication

champion across the African continent. This will be done through the following

strategic intent:

To offer our customers enhanced bundled packages and tailored calling plans

that will successfully grow annuity revenue;

To use our unique fixed-mobile capability as a platform for future growth. We

intend to provide customers with array of ICT services, both voice and data,

fixed and mobile. It should also enable us to leverage the strong relationships

we have with our current corporate customers by extending the bouquet of

services we offer to them;

To utilise the strength and reliability of our unique Next Generation Network

and infrastructure to bring high quality broadband products to the market.

These new and exciting ‘content rich’ offerings are particularly applicable to

digital home consumer markets such as gated communities; and

To become a Pan-African integrated service provider by making the Telkom

brand synonymous with the best products and services on the continent

Strategic decisions or options that Telkom has taken as a result of its objectives will

be highlighted below:

- Telkom has increased its global connectivity by entering into strategic

memorandum of understanding with one of the largest telecommunications

companies in the world, AT&T, which will connect Telkom’s regional network

with AT&T global network. In this regard Telkom has co-operated with AT&T

for each partner to contribute something and moreover Telkom will benefit in

terms of being connected to AT&T global network

- Telkom made its acquisition outside South Africa, namely, Africa Online,

which is the largest Pan-African Internet Service provider in Sub-Saharan

Africa

- Telkom has pursuit a revenue growth opportunities outside the borders of

South Africa. This was spearheaded by the acquisition in 2007 of Nigeria

based Multi-Links.

- Telkom also acquired 100% interest in MWEB Africa Limited. MWEB Africa is

a group of companies offering internet services and its own VSAT access in

Sub-Saharan Africa

- Telkom is also investing in the Next Generation Network (NGN) to support

converged services and the massive amounts of bandwidth that go with them

- Telkom ADSL leads the broadband explosion with Telkom aiming to have

achieved an ADSL penetration of 15% to 25% of total access lines. Demand

is also being stimulated by the growing use of internet in the country’s

education system and increasing expectation for learners to use internet as a

research resource. The proven speed of Telkom service also drives growth in

the ADSL subscriber base.

- Telkom has rolled out 141 W-CDMA (Wideband Code Division Multiple

Access) sites in major metropolitan areas throughout South Africa. This W-

CDMA allows Telkom to deploy fixed-line look-alike services with regional

fixed numbering plans instead of deploying copper.

- Telkom also moved into offering a fully fledged mobile service called 8.ta,

which is a growth segment and mechanism against mobile cannibalism.

In the context of the strategic options outlined above, it could be said that Telkom

strategy was to remain focused on pursuing growth into Afican markets, and

reaching all its customers, new and existing with its new and existing communication

services and products. We have seen a number of acquisitions by Telkom to enter

into new markets and to partner/form alliances with other organisations such as

MWEB, Africa Online and AT&T. This signaled a growth strategy by Telkom.

Telkom ventured into mobile business for growth and also due to the growing

pressure from mobile operators to its international fixed-line communications.

From Porter’s generic strategies, it could be suggested that Telkom in its growth

strategy or plan, favours a differentiations strategy

According to Porter, there are three generic strategies that a company can undertake

to attain competitive advantage: cost leadership, differentiation, and focus. Porter

(1985) cited by Bakhru (2010:63) and Sidahmed (2006:9) argues that although

organisations can have a myriad of strengths and weaknesses relative to

competitors, they essentially compete in one of two ways: on the basis of cost or

differentiation. Porter’s generic strategies are shown in figure 2.1.

Figure 2.1: Porte’s generic strategies

A company pursuing a differentiated strategy seeks to be unique in its industry along

one or more dimensions that are valued by buyers. It selects attributes that buyers in

an industry perceived as important and positions itself to meet those needs as fully

as possible (Viney and Gleadle, 2010).

Is Telkom selected competitive strategy appropriate or not?

In responding to the above question, three sets of generic testing criteria by Johnson

and Scholes (2003) cited by Viney and Gleadle (2010:52) will be used, namely,

sustainability, feasibility and acceptability

Suitability

Telkom’s proposed strategy is appropriate interms of it suitability since it matches or

addresses its strategic objectived. For Telkon to grow , it needed to enter new

markets which happened throught their differentiation strategy. Therefore, with its

acquisition strategy of communication operators, it was able to penetrate new and

existing markets.

Feasibility

In terms of whether the strategy is feasible, Telkom strategy might not be feasible

due to their shrinking revenue & profits, but with its high quality and experienced

staff, technology and physical resources, Telkom strategy might meet its objectives

Acceptability

The strategy might not be accepted consideration those acquisitions that ended up

being sold to other providers due to the decline in revenue and its cost.