The confusion started on Tuesday 4 August following a press statement by Liquid Telecom South Africa about the “strategic repositioning as Liquid Intelligent Technologies”.
The statement lacked clarity and contained dubious statements, like Liquid Telecom “providing an open-access network that has resulted in 5G being available throughout South Africa”.
It emerged that this press release came shortly after Liquid Telecom staff were sent Section 189 notices, informing them of planned job cuts.
When MyBroadband tried to get clarity about the repositioning, name change, and retrenchments, Liquid Telecom SA said they could not comment.
Instead, the company organised an interview with acting Liquid Telecom SA CEO Craig van Rooyen to answer questions about their plans.
However, the company cancelled this interview shortly before it was set to take place and it did not respond to questions about changes at the company.
The uncertainty about Liquid Telecom’s plans extended to its employees and the company’s partners, who were also left in the dark.
Speculation was rife that the strategic repositioning was merely a smokescreen to hide the fact that the company was planning to cut jobs.
The statement came only a week after a report that Zimbabwean billionaire Strive Masiyiwa was struggling to sell a stake in Liquid Telecom because of the coronavirus pandemic.
Bloomberg reported that Masiyiwa is seeking buyers for 20% to 34% of Liquid Telecom for as much as $600 million to repay a $375-million loan that was backed by Public Investment Corp (PIC).
The PIC is reportedly demanding the issue be resolved by the end of August after granting an extension on the payment earlier this year.
Masiyiwa had pledged shares in Liquid Telecom to the PIC as security for the loan. Masiyiwa was planning to repay the debt from the proceeds of an initial public offering in Liquid Telecom, which was scrapped because of volatile equity markets.
According to the report, Masiyiwa would rather sell part of his 66% stake in Liquid Telecom to avoid surrendering shares in the company at a discount to the PIC.
MyBroadband received information that Liquid Telecom South Africa was under pressure to improve its bottom line, and without good prospects to increase revenue, the only option was to cut costs.
Retrenchments are an obvious first step to cut costs, but the timing is challenging. It is amidst a serious economic downturn due to COVID-19 and follows large-scale retrenchments at the company in 2018.
It is, therefore, no surprise that Liquid Telecom’s announcement was met with scepticism.
Liquid Telecom Group CEO Nic Rudnick provides feedback
Liquid Telecom CEO Nic Rudnick
After Liquid Telecom South Africa was unable to answer questions about the strategic repositioning and retrenchments, MyBroadband contacted the company’s group CEO, Nic Rudnick.
Rudnick told MyBroadband that to continue the growth they have achieved over the past year, they must offer their customers new products in addition to their current offerings.
“As such, the company now needs to develop people and improve organisational efficiency to enable us to operate in our intelligent technology business,” he said.
Liquid Telecom will provide additional solutions on top of their basic connectivity services, which include cloud services, managed services, unified communications, and cybersecurity solutions.
“This strategy is to provide an integrated technology capability that enables our customers to transform their business through technology and to survive and grow in a very changed business environment,” he said.
“It is also our intention for South Africa to become a large-scale shared services hub for our digital services across the whole continent.”
Nine months ago, Liquid Telecom’s order intake was 80% in favour of connectivity and 20% in digital products.
“Now, in July, our order intake is 60% from digital products and 40% from connectivity, showing that our strategic transition is sound and that our reputation as a best in class service integrated technology provider is growing.”
Rudnick explained that Liquid Telecom’s transition requires a changing skills mix and structure with the potential for staff to be reassigned and trained with new skills to be more competitive and offer new solutions to their customers.
He said no decision has been made about retrenching any staff members at Liquid Telecom South Africa.
“We have initiated a consultation process which is aimed at considering and reaching consensus on appropriate measures to build an operating model that helps us achieve these objectives and best service for our customers,” said Rudnick.
This, he said, is about putting the right people into the right places.
“The process is expected to last some time and therefore, it would be very premature to pre-empt any decisions without gaining conclusions informed by an inclusive consultation process.”
Now read: Liquid Telecom announces strategic repositioning