SK Telecom received the Telkom Silver Supplier award in 2001
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Telkom actively promotes black economic empowerment
If money spent on black economic empowerment is any yardstick, then few South African companies can boast as dazzling a track record as Telkom: R14 billion over the past five years. More to the point, however, is that the main beneficiaries of the Company's BEE purchasing power are not just a privileged few, but hundreds of small black businesses that are starting to hold their own in the mainstream economy. Small black businesses have long battled to get a foot in the door of big business. When SK Telecoms started out 10 years ago, it was a one-man show that for years picked up just enough business to keep bread on the table of its founder, and now managing director Sidney Kennel. Today, the construction company, which is listed as an independent contractor with Telkom employs 34 full-time employees, runs a fleet of 12 vehicles and is gearing to spread its wings into new markets. According to Kennel, 1998 was the turning point when SK first registered with Telkom as a "developing contractor" – an emerging black business that needed some initial hand-holding in terms of business capacity. As befits a new relationship, the two companies took things slowly at first. In the first year of trading, SK handled R80 000 worth of construction work for Telkom, mostly digging trenches, erecting telephone poles, cabling and installing PABX systems. It helped that Kennel had 12 years of hands-on experience in this field, having worked at Telkom before venturing out on his own.
Slowly but surely, the work volume grew and, within two years, SK Telecom was promoted to the status of "ready-to-use contractor" – a Telkom supplier with sufficient technical, financial and business know-how to stand on its own feet. "In 2002 alone, we invoiced Telkom for R6 million," says Kennel. Essa Govender, Telkom's Procurement Services Group Executive, says that during the 2002 financial year 211 SMEs utilised this short-term payment facility, while Telkom trained 656 suppliers in categories ranging from tender courses to basic business management. To stay on Telkom's BEE list, and to get there in the first place, the 600-plus BEE companies on Telkom's books have to meet a stringent set of quality, financial, delivery and ownership criteria. The company has to prove it has genuine BEE credentials – which is, to ensure real empowerment as opposed to enrichment of an elite minority, goes deeper than merely looking at the composition of a candidate company's shareholding. "In addition to its equity base, we look at the executive and management structures, staff complement and future plans," says Govender. SK Telecoms is 75% black owned, 85% black managed and the workforce is over 90% black. The directors collectively have 60 years experience in telecoms sector.
Govender explains that in establishing its empowerment criteria, Telkom is guided by the recommendations of the Black Economic Empowerment Commission, and since 1 May 2002 has defined empowerment equity as: Black company (51% equity owned and managed by blacks) Black empowered company (25% - 50% equity owned and managed by blacks) Black influenced company (5 – 25% equity owned and managed by blacks) Long after a company's initial registration, Telkom continues to monitor ownership and conducts quarterly BEE audits. "We also evaluate the training that companies have in place for employees and carry out on-site evaluations," says Govender. And, of course, suppliers are expected to deliver all round, with Telkom performing quarterly quality checks on technical quality, safety, financial soundness and even whether a supplier is meeting its tax obligations. SK has consistently passed the test, earning a Telkom Silver Supplier Award in 2001 and is now in the process of applying for international ISO 9002 accreditation. SK's directors concur: "Telkom has set quite a high standard and the only way to succeed is by delivering a superb service. We believe in being accountable and our aim is to grow into a substantial BEE player."