Eskom Chairman Mthetho Nyati stated that the organizations Business Leadership South Africa and Business Unity South Africa, which have long been the loudest critics of political interference in state-owned enterprises, themselves promote 'political interference' by insisting on transferring the network to an independent operator.
The CEO of BLSA, Busisiwe Mavuso, strongly objected to this position, stating that 'Nyati is fundamentally mistaken both regarding the motives behind our support and what proper governance requires from the Eskom board of directors.'
When looking at the situation without considering personal ambitions or grievances, a simple question arises: should a company that generates most of South Africa's electricity also own the network upon which its competitors depend?
A similar experiment was already conducted, and it was called Telkom, which cost the country a decade. For many years, Telkom functioned as a competitor in the retail telecommunications market while simultaneously owning the country's sole last-mile backbone. Anyone wishing to offer broadband or voice services was forced to purchase access from the very company it competed with.
The results of this period are publicly documented. Telkom was found guilty of abusing market power between 1999 and 2004, for which it paid a fine of 449 million rand. Furthermore, the company settled a second lawsuit concerning its conduct in 2005–2007, paying a fine of 200 million rand and agreeing to functionally separate its wholesale and retail divisions so that its wholesale division would treat its own retail business as 'just another customer,' as stated by the Competition Commission.
Regulators attempted to act as arbitrators. The government promised the decomposition of the local loop—opening up Telkom's copper network to competitors—and gave the company until November 2011 to comply with this requirement. However, when that month arrived, the communications regulator Icasa could only propose frameworks involving consultations, working groups, and a 'real data streaming product' by November 2012. None of this was implemented. The decomposition of the local loop was never implemented in South Africa—not in 2011, nor ever after.
In 2015, the company spun off its wholesale division as Openserve. It is noteworthy how the then-CEO Sipho Maseko described the logic of this step: 'Thanks to this separation and the creation of Openserve, we eliminate critical obstacles on our path to success.' He also noted that the Eskom board of directors could benefit from the phrase: 'Shared responsibility equals no responsibility.'
In other words, the monopoly itself eventually concluded that combining the roles of player and referee harms the company. But by then, the damage had been done. Telkom's competitors, lacking access to the copper infrastructure, spent years creating alternatives—Vumatel, Octotel, and Frogfoot laid fiber optic cables in the suburbs, while Telkom guarded a network whose value was eroding. Consumers paid for this lost decade with high prices and low speeds, and Telkom paid with fines, lawsuits, and diminished relevance.
The electricity situation is more dangerous than the telecommunications situation. In telecommunications, the market could eventually bypass the gatekeeper. Creating a competing fiber optic last-mile network is expensive but possible, and it happened. However, no one is going to build a competing 400kV transmission network through Karoo. Independent energy producers who do not have access to the grid have no workaround; they simply do not connect, and their projects remain in the queue. It is this limitation that hinders investment in renewable energy, which South Africa urgently needs, and therefore the competitive electricity market is the real target of the reform program.
Mavuso's argument is structural, not personal: an entity that is simultaneously a generator and a gatekeeper to the network relied upon by other generators has a conflict of interest embedded in its very structure. No board charter, however well drafted, will solve this problem.
To be fair to Nyati, his concerns are not frivolous. He asked in his post on X: 'These are the same bodies insisting on corporate governance and board independence. So what is the role of the SOE board? What exactly do they believe?' This is a valid observation, and his insistence that Eskom must develop renewable energy or face disappearance demonstrates a chairman who understands that the utility cannot survive without change.
The warning from Eskom CEO Dan Marokane that immediate legal separation could trigger cross-default conditions in credit agreements also deserves serious attention, even if, as Mavuso notes, bondholders worldwide have experienced similar restructurings before.
However, these are issues of consistency, and consistency issues have solutions. They are not arguments against separation, and—crucially—the decision has already been made.
President Cyril Ramaphosa publicly rejected the plan to maintain family control in February, stating that an independent transmission system operator 'will own and control the transmission assets and will be responsible for operating the electricity market.'
Business asserts that this requirement is now enshrined in law, in Section 34A of the Electricity Regulation Amendment Act. And the financial logic here is undeniable: an operator that owns nothing has no balance sheet, and without a balance sheet, it cannot attract the 440 billion rand needed to build more than 14,000 kilometers of new lines over the next decade.
The lesson Telkom teaches is not that separation happens easily. It is that delaying this process is the most expensive option for the country and, ultimately, for the company itself. Telkom fought for separation for ten years, watching the value of its protected network erode, and then accepted the separation as part of its own restructuring plan.
The Eskom board of directors must stop reviewing settled policy and start discussing the terms of transfer that protect creditors, employees, and the network itself. That is its current governance duty. Because if two decades of telecommunications history taught South Africa anything, it is that one cannot be both the network and the gatekeeper simultaneously.
