Former Telkom CEO Sipho Maseko’s performance analysed

When Sipho Maseko took the reins at Telkom on 1 April 2013, the company was struggling. It had a bloated workforce, recorded a net loss of R11 billion, and its share price was in the doldrums.

Maseko cut staff, shifted the strategy to focus on its mobile operations, and acquired Business Connexion (BCX) to strengthen its presence in the IT market.

It helped to increase revenue from R33 billion in 2013 to R41 billion in 2017 and turn the company from a loss to a profit.

On the surface, things looked good for Telkom. However, the BCX acquisition and competing with Vodacom and MTN came at a cost.

Telkom’s net debt increased from R545 million in 2014 to R16 billion in 2022, and its net debt to EBITDA ratio increased from 0.1 to 1.7.

Free cash flow also plummeted, and Telkom struggled to increase revenue over the last five years.

There were also questions about whether Maseko’s strategy to focus on its mobile operations and neglect its fibre rollout was the right thing to do.

While mobile subscribers rapidly increased, Telkom’s fixed access lines plummeted from 3.8 million to 1 million during Maseko’s tenure.

Fixed broadband subscribers also declined from 1 million in 2015 to 560,000 six years later.

Telkom relinquished its dominance in the fixed broadband market and allowed other fibre network operators like Vumatel to eat its lunch.

BCX, which was supposed to be a strong growth driver for Telkom in the business and enterprise ICT market, also struggled to deliver on its promise.

Sipho Maseko’s performance as Telkom CEO

Maseko left Telkom on 31 December 2021 after nine years at the company, handing the baton to Serame Taukobong.

The Telkom share price increased 460% during the first two years of Maseko’s tenure but was trading 34% lower than its April 2017 high when Maseko left.

Maseko was able to increase revenue and profit, but it came at the cost of much higher debt, big staff cuts, and poor free cash flow.

Sipho Maseko01-Apr-1331-Mar-22Change
RevenueR32.5 billionR43.0 billion+32%
Net Profit-R11.5 billionR2.6 billion+123%
Free Cash FlowR2.1 billion-R2.1 billion-198%
Net EquityR18.2 billionR34.0 billion+87%
Share PriceR15.00R54.08+261%