Independent Field Technicians Petition

Meeting report

The Chairperson made her greetings and indicated that the meeting may proceed.

The Committee received an apology from Mr V Zungula (ATM).

The Committee would hear a briefing on the petition from Independent Field Technicians (IFT) regarding a contractual dispute with OpenServe (a Telkom subsidiary).

Mr Phindile Dyani, Executive: Government Relations, Telkom, thanked the Committee for giving Telkom the opportunity to make the presentation and for answering the question left from its previous engagement.

In the fifth Parliament, Telkom had answered and elaborated on details of the company’s engagement with SMMEs and the concept thereof.

Mr Dyani also offered Telkom’s apology for not availing itself to the Committee immediately after its request, as the company needed more time to prepare to provide Members with adequate answers.

Mr Dyani told the Committee that Telkom had engaged with the Department of Small Business Development as well as the former Department of Telecommunications. A workgroup was established and the outcome was that Telkom needed to come up with some mechanisms to address the matter with the SMMEs. He pointed out that Mr H Kruger (DA) who was in the fifth Parliament could attest to that.

Mr Dyani outlined Telkom’s company profile. He said that Telkom had transformed from its old telephonic company to a new, fully digital company that generates approximately R40 billion in revenue and has more than 12 000 employees.

In addition, he said that through its subsidiary, OpenServe, Telkom runs the largest fibre in South Africa, expanding more than 50 000km of fibre.

Ms Mmathebe Zvobwo, Telkom Executive: Enterprise and Supplier Development (FutureMakers), provided an outline of Telkom’s shared value as well as the Telkom Group’s investment in FutureMaker. She highlighted that FutureMakers had generated at least R1 billion of revenue.

The operational details of FutureMakers’s Independent Field Technicians Programme were provided to the Committee.

The ICT market in South Africa and analysis of the market were provided to Members.

The background to contract implementation was provided. The contract negotiations started in May 2017 and concluded on 1 September 2017 and all service providers were re-briefed in a roadshow in December 2017.

Telkom emphasised that it increased payments to service providers to compensate for improved operational behaviour.

Other key issues included Telkom’s repeat fault analysis, payment alignment issue, and the company’s engagements with SMMEs, among others, were provided to the Committee. (Details can be found in the presentation slides.)

The focus was on the IFT companies that had raised concerns to the Department of Small Business Development.

Discussion
The Chairperson emphasised that members needed to deliberate on the matter and re-engage with Telkom.

Mr H Kruger (DA) remarked that he was unhappy with the very generic presentation. He recalled that the fifth Parliament had also received a similar presentation from Telkom. Had Telkom provided necessary responses, it would not have resulted in a petition. He noted that whenever there are business engagements involving big and small businesses, small businesses always perish.

Mr Kruger enquired about the repeated faults and the unaffordability that those faults would have for small businesses. His understanding was that Telkom required service providers to provide a seven day period for repair warranties at the beginning. Any services which occurred during this period were for the account of service providers. Then Telkom changed it from the seven day period and extended it to 30 days. After that, small businesses were obliged to provide a 30-day warranty period without any form of payment. Eventually, that duration was reverted to seven days. But the 30-day period had lasted for more than two and a half years which became very unaffordable for small businesses as they never got any form of compensation from Telkom.

Mr Kruger sought clarity on the cost to service providers for fixing copper lights which he heard was about R900 per installation, but Telkom was only willing to pay R620.

Mr Kruger asked Telkom to confirm whether it asked service providers to back-date the service agreement for grants, which in his view is incorrect.

Mr Kruger remarked on the very generic presentation and emphasised that what the Committee wanted to know was individual cases to evaluate the progress of small businesses. He also warned Telkom not to use COVID-19 as a scapegoat for many of its issues.

Mr F Jacobs (ANC) concurred with Mr Kruger’s view and emphasised the importance of cultivating small business growth in Telkom. He encouraged Telkom to seek an amicable but fair solution that would work for both Telkom and its service providers.

Citing the committee’s oversight role, Mr Jacobs wanted to get to more specific details. He queried whether the service agreement contracts were another form of nepotism for friends and pals because they were not benefitting the people.

The Committee had received a report from the Competition Commission which raised the question of whether those service level agreements were indeed empowering small businesses to transform the sector.

He observed that it seems that currently only three or four big companies were benefitting from the arrangement and had monopolised the market.

His constituencies in Mitchells Plain and Khayelitsha are not happy as many labour contractors bring people from outside to do the digging work.

Mr Jacobs stressed that Telkom must consider employing the youth and local people from local areas to install fibre during its procurement of service provider process.

He requested a report from Telkom indicating townships as well as the corresponding beneficiaries.

Ms B Mathulelwa (EFF) believed that the issue under discussion was a sensitive one upon which members would need more time to deliberate. The time constraint of this meeting would not suffice.

She raised concerns over the rare beneficiaries in the KZN and the Eastern Cape. She remarked that Telkom had too many hidden agendas and often neglected townships and rural areas.

She agreed with her colleagues and suggested inviting both the victims who brought forward the petition as well as Telkom for a joint meeting.

Mr G Hendricks (Al Jama-ah) commented on the job creation issue, such as digging trenches in this case. He said that Telkom and its contractors were effectively creating slave labour when requiring employees to complete a certain amount of kilometers for a certain amount of money, which was below minimum wage.

He believed that the Committee and Telkom needed to investigate this matter as communities were complaining that contractors hired by Telkom always bring people from the outside to perform work that can be done by local people.

Mr Hendricks demonstrated the true meaning of empowerment. He said that our people did not want to be digging forever. Telkom needed to show the Committee how many of those people whom they employed that were digging have progressed to other levels such as becoming a service provider themselves.

Inkosi B Luthuli (IFP) observed that Telkom bullied its contractors most of the time.

He also proposed scheduling another session to deliberate on the matter.

He drew on his own experience with fibre connectivity. He said that Telkom had commenced work with small contractors back in 2015. But to date, there was still no fibre in his constituency area which is between Hibberdene and Mtwalume Village.

Rural areas, which are predominantly black, were often neglected by Telkom. Thus, he asked Telkom when fibre was going to be installed in these areas.

Response
Mr Dyani told Members that they needed to watch the two-minute video that Telkom had prepared for them so that they could have a better understanding of what Telkom was doing to assist the SMMEs in townships and to see who real the beneficiaries were.

He echoed Mr Jacobs’ view on the importance of SMMEs in uplifting communities as he highlighted his own roots: Paarl, Western Cape.

He indicated that Telkom’s R1 billion investment was only the direct benefit and that the indirect benefit could amount to more than R5 billion.

Mr Dyani reaffirmed Telkom’s approach to strive to provide win-win situations for both the company and its service providers.

On the petition, Mr Dyani requested to re-engage with the Committee and its content advisor to provide members with more detail when there was more time.

He explained to members that Telkom can arrange a programme to showcase the company’s infrastructure to Members.

Telkom can arrange to have Members visit its underground cables and identify the cables that run around the Cape Town metropole.

He believed that this process would help demonstrate to Members how Telkom’s technology worked and how fibre was connected to townships.

In response to Ms Mathulelwa’s question, he reiterated that Telkom took its role of assisting SMMEs very seriously, regardless of whether the SMMEs were in KwaZulu-Natal or the Eastern Cape.

He said Telkom’s beneficiaries were across all provinces.

Mr Dyani explained that fibre historically had been rolled out in some areas while the new government still had not rolled out fibre in townships.

He said Telkom is committed to providing fibre for everyone to democratise telecommunication.

He added that Telkom is committed to ensuring that no one is left behind.

On the question of repeated faults, the Telkom delegation explained to the Committee that originally the guaranteed repair date was fixed at 30 days during the initial implementation of contracts.

There was a dispute which was logged in 2018 which was followed by Telkom’s deliberation which led to an amount of R31.5 million being written off internally for Service Level Agreements (SLAs).

In 2019, the repair days were reduced from 30 days to 14 days.

Since December 2021, this period has been again reduced to seven days.

Telkom’s delegation requested to provide more specifics of the companies that had been involved in the next engagement with the Committee.

The delegation responded to the difference between the fees of R620 and R900. Telkom had various mechanisms of payment with a fixed fee of R620.

Telkom also makes provisions for incurring costs for service providers.

Since there are always unpredictable factors depending on each household. If a service provider incurs an additional fee on site (for instance, having to cut down a tree), then the service provider would be compensated accordingly.

Although Telkom had conducted training workshops on how to charge for a Bill of Quantity, some service providers still had no knowledge of that.

It was clarified that the R620 was related to insurance and not installation. The installation price is completely different.

Telkom’s executive delegation explained the company’s contract signature process to Members.

The current system it uses cannot be back-dated, hence Telkom’s team was unsure of such incidents. However, they guaranteed that they would investigate the matter further and report back to the Committee.

Adoption of minutes
The Committee minutes for 16 and 23 March 22 were adopted.

The meeting was adjourned.