HOW

LUNGA SIYO

is transforming TELKOM Consumer
Business with INNOVATION

 

Telkom is among the more successful of South Africa’s (partly) state-owned entities. This was not always the case; there was a time when the company was struggling, along with many other of the country’s SOEs. At some point, however, those in charge applied their minds, faced reality and started looking at Telkom like a business. The changes that followed included leadership change. It was a difficult time for Telkom, which was dealing with rapidly-evolving market forces; the telecommunications provider was in danger of being left behind. In this regard, a big part of Telkom’s business was once landline telephones in people’s homes. Nowadays, such devices are hard to find. There was also a time when the transition to mobile phones could have meant the end for Telkom, yet the company is still here. Many of the changes that have taken place at this African telecommunications giant stem from its Consumer Business division, which is innovating from within – and taking Telkom from the past to the future.  Recently, Telkom’s Consumer segment, including mobile, delivered a 10.1% increase in operating revenue, to R25.815 billion. This was stimulated by strong data demand in the mobile business, with service revenue increasing 34.5%, to R16.938bn. This includes applications services revenue of R528 million. Fixed-line copper revenue continues to decline, due to ongoing migration to next generation technologies such as LTE and fibre; however, the rate of decline slowed as the demand for home connectivity increased. To meet this, Telkom created compelling new value offers to enable working and learning from home. A strong broadband demand – and a prudent cost containment strategy – led to an impressive improvement to R5.007bn, translating into an EBITDA margin of 19.4% for the consumer segment. The small and medium business (SME) component under Telkom’s digital marketplace – Yep! – continues to improve operationally, with measures implemented to control churn, given the challenging economic landscape. Although SMEs have been significantly impacted by lockdown measures, there are some positive results, with new customer acquisitions growing. Mobile service revenue to businesses and public sector entities increased by 31.1%, mainly due to work and learn from home. An online marketplace platform was launched and digital services revenue grew by 20%. The platform attracts an average of 337 000 unique visitors a month.

Behind such impressive performance are capable leaders, intent on building Africa’s telecommunications company of the future. One of them is Telkom’s Lunga Siyo, who hails from Mdantsane, a township located about 15 kilometres outside East London in the Eastern Cape. Mdantsane is the largest township, by population, in the province. It is well known for having turned out, over the years, some prominent personalities and leaders, among them politicians such as Nosiviwe Mapisa-Nqakula, Dali Mpofu, Mandla Makhuphula and Ntombazana Gertrude Botha, as well as several local boxing legends, including Happy-Boy Mgxaji, Mzimasi Mnguni, Welcome Ncita and lightweight WBC champion Luxolo Galada.

It was in this bustling township environment that Siyo was brought up by his grandmother. As a youngster, he was exposed to its business and consumer dynamics, which formed part of his early leadership education. This he enhanced by studying cost accounting at the Cape Peninsula University of Technology. He then took this a step further with studies at the Oxford Brookes University in the UK, where he earned a Bachelor of Science (Hons) degree in Applied Accounting. To sharpen his business skills, he also acquired a Master in Business Administration (MBA) at Millpark Business School in Johannesburg. The final polish to his education – in corporate business methods, at least – was obtained through working for and training with several leading international companies, both in South Africa and Europe. All of this together shaped him into a business leader able to take on any challenge. One such challenge has been about keeping Telkom relevant to society; another has been the pandemic. In this regard, Siyo has demonstrated exceptional leadership across the board. The Consumer business arm that he leads is working on some of the most important elements within Telkom. Some of these are about taking care of current concerns, while some are about the future. As a business that has relied on legacy, one of Siyo’s focus areas has been about building solutions for the future. An example of this is the Yellow Pages. When he was recruited by Telkom, Siyo could not believe the amount of revenue generated by the company’s Yellow Pages business. The concept of the Yellow Pages was originally conceived in 1883 by a printer living in Cheyenne, Wyoming, in the US. It was pure serendipity; the printer, who was working on a telephone book, had run out of white paper and was forced to use yellow paper instead. The look soon caught on. In 1886, the first “official” Yellow Pages book was distributed. Currently, the phrase “Yellow Pages” is used in at least 75 countries around the globe for print telephone directories (usually published by local phone companies for their local market).

Typically, Yellow Pages directories are published annually and distributed and delivered for free within the region in which any given phone company provides coverage. Profits are generated via advertising revenue; local and national businesses pay the telecommunications company and/or publisher to include in the directories ads of varying size and prominence for their goods and services.

In recent years, however, advertising revenue for Yellow Pages has fallen as the directories fell out of favour, with advertisers and the public turning towards online sources. Siyo was tasked with turning the Yellow Pages into a profitable business. He did just that by creating Yep!

The Yep! platform provides the SME segment with a diverse range of connectivity and digital marketing services, which helps customers thrive in an increasingly digital economy and market. The Yep! brand was successfully launched, together with a new Yep! app, on May 15 last year. This was the first phase of an e-Marketplace strategy, crafted mainly by Siyo and his team.

The platform raked in 500 000 customers (service providers) in less than a month after going live. As at March 31 this year, there were over 25 335 downloads across Google Play, Apple and Huawei stores, with the desktop version attracting an average of 337 827 users a month. This is significant when one considers the future prospects of a tool such as Yep! To build a product from its dying predecessor (Yellow Pages in print) is not an easy task. Siyo did so by laying the foundations for a strong online business at Telkom. The platform is not alone in providing digital solutions to Telkom consumers; it is also supported by Freed@, a unique platform which allows SMEs to showcase their business and engage with their customers via surveys and competitions. The platform’s attraction is that customers can earn loyalty points, which can be redeemed for a variety of rewards, including Telkom Mobile airtime and data. At the same time, Telkom Digital Wallet was piloted. Already, there are a significant number of verified customers using this platform. Pre-paid purchases are the most common transactions. The wallet uses WhatsApp and allows customers to send money to anyone with a mobile number – quickly and securely – without needing additional apps. Customers can pay, or get paid, through a quick response code, as well as send money, make cash withdrawals or pay for goods.

The wallet can also be linked to physical cards such as VISA and Mastercard. When lockdowns were introduced to prevent Covid-19 from spreading, small businesses felt the pain first, then big businesses. Suddenly, e-commerce became an important way of trading. Pivoting towards this was easy for many big businesses, but not so much for small ones. For small and medium entities, turning to digital required the relevant skills and infrastructure, which was a costly exercise. It was a unique moment in the history of business when so many embraced digital operations. Siyo and his team saw this as an opportunity to help small businesses to continue to operate.

Under his leadership, Telkom has transformed its 70-year-old Yellow Pages business into an online marketplace. Targeting SMEs, it developed the YEP app, which has supported local businesses during the pandemic. Within Telkom Consumer, the pandemic presented challenges and opportunities that required innovative leadership to minimise risks – and to exploit them. To prevent transmission of the virus, Telkom Consumer was one of the first to allow workers who could, to work from home. The risk factor was one of the determinants, according to the CEO of the consumer business division. Working from home also presented its own challenges, as some employees worked more than they could take care of themselves. Again, this required caring leadership to detect potential harm ahead of time. Siyo indicates that the company had to intervene with necessary measures and encourage staff to prioritise their health. The balanced manner in which Siyo approached business during the pandemic shows in the company’s results. Telkom’s Consumer Business was one of the key entities that maintained connectivity infrastructure to enable education. At the same time, digital solutions were also deployed to enable economic activity. Going forward, Telkom Consumer wants to become the go-to place for all consumers and small, medium businesses to connect and grow. ”At the core of this is our continued growth in data services, broadband leadership and extending our offerings to digital content and financial services to our consumers”. Focus will also be to digitally transform the business into a platform business and take opportunities in a market and economy that is becoming much more digital. ”We want consumers to see us fulfilling their digital lifestyle needs and becoming a go to marketplace enabler. Continued investment into capabilities of the future and our people will be key to delivering on this aspiration” said Siyo.

Telkom Consumer continues to be the driver of growth in the group, with revenue increasing by 2.1% to R12.960bn, driven by the mobile business. This was partially offset by the decline in fixed-line business, due to continued migration to next-generation technologies such as long-term evolution (LTE) and fibre, and ongoing pressure in the SME segment. Mobile service revenue grew by 6.8% to R8.847bn, supported by 18.8% year on-year growth in active customers to 16.3 million. Mobile data revenue grew by 6.1%, to R6.374bn, supported by 10.3% growth in mobile broadband customers to 10.6 million, which represents 65.5% of Telkom’s active customer base. This performance was delivered against a strong first half in the prior year, which saw a surge in data demand due to the pandemic. Lunga Siyo’s leadership is what South Africa needs to stay relevant as the country moves towards the 4th industrial revolution. He has proven this – and will no doubt continue to do so – as he implements strategy within Telkom.

Lunga Siyo’s leadership is what South Africa needs to stay relevant as the country moves towards the 4th industrial revolution.

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