Hedberg to quit Telkom - TechCentral

Hedberg to quit Telkom

Jeffrey Hedberg is stepping down at Telkom

Jeffrey Hedberg is quitting Telkom. The acting group CEO will leave at the end of March, TechCentral has learnt exclusively from reliable senior sources at the JSE-listed telecommunications group.

Hedberg declined to comment when contacted on Thursday evening, but this publication has established that he has already informed Telkom chairman Jeff Molobela of his intention to step down.

He has told Molobela that he will not make himself available to take the reins at the group on a permanent basis.

Hedberg has held the position in an acting capacity since former CEO Reuben September was forced out last year.

Molobela, who himself is believed to be on his way out, had asked Hedberg to stay on until November, but he has declined the invitation, saying he’d rather pursue other opportunities, the sources say.

It’s understood Hedberg felt he would not be given the mandate he needed to fix Telkom commercially and operationally. TechCentral’s sources say Hedberg, a US national who was previously CEO of Cell C, would have wanted carte blanche to fix Telkom’s problems. This would have involved reducing costs and retrenching staff.

The sources, who spoke to TechCentral on condition they stay anonymous, say Hedberg felt government wouldn’t have given him free rein to do what he felt was necessary.

Retrenchments are unlikely to find favour among ruling-party politicians, especially in an election year.

Also, TechCentral’s sources say that Hedberg was concerned that government wanted Telkom to play a more active role in the rest of Africa. Hedberg, they say, believes Telkom needs to fix its operations at home before attempting to expand again elsewhere on the continent.

Hedberg’s decision to step down comes during a time of great uncertainty at Telkom. Government’s class-A share, which has given the state special rights over ordinary shareholders for the past eight years, expires on 5 March, and it’s not clear what role it sees the group playing in terms of its developmental agenda.

JSE CEO Russell Loubser has already warned government that the bourse will fight any attempt to extend the special rights beyond their expiry on 5 March. Telkom’s board and the JSE have already approved the group’s new articles of association, and these are now with Padayachie for approval.

Government holds almost 40% of Telkom’s equity — the figure is over 50% if the stake held by its pension fund management company, the PIC, is taken into account.

According to Telkom sources, the new articles of association strip government and the PIC, which also enjoys special rights through a class-B share it inherited from former Telkom strategic equity partner Thintana, of all their special rights.

Padayachie told TechCentral last year, shortly after being appointed as communications minister, that government was not happy about losing these rights. It’s not clear if government will force a showdown with the JSE over the issue, but if it does analysts are worried it could send the wrong message to foreign investors.

Already, Telkom is trading at a big discount to its net asset value, in part because of investor concerns about government’s involvement in the telecoms group.

It’s not clear what Hedberg will do next, though it’s understood he has no immediate plans to leave SA.

He first came to the country when he was appointed as CEO of Cell C in 2006. He left Cell C in 2009 and was hired by Telkom to try to rescue Multi-Links, the group’s failing Nigerian subsidiary.

When September was forced out, Molobela asked Hedberg to take over leadership of the group in an acting capacity until a permanent appointment could be made.

Hedberg’s decision to leave will pile the pressure on communications minister Roy Padayachie, who is likely to appoint a new chairman of the board before government’s special rights expire. It’s strongly rumoured that government wants to give the job to businessman Lazarus Zim, who is regarded as politically well connected. Zim is a former CEO of Anglo American SA and is founder and chairman of mining group Afripalm Resources.

One senior Telkom source, speaking on condition of anonymity, describes the situation at Telkom as an unfolding “tragedy” given that the group has valuable assets that could be squandered if government interferes in the commercial running of the organisation.  — Duncan McLeod, TechCentral

21 Comments

  1. It’s a shame Jeff is leaving Telkom.I believe he was going to turn Telkom around. Maybe it’s about time they give Pinky that post.

  2. This will be a sad day for Telkom and its employees if truth, you can not be a welfare organisation and make a profit. When will the Government learn how business is to be conducted.

  3. Everybody confuses voluntary offerings with retrenchments, Telkom must reduce their headcount in order increase their revenues. Telkom’s headcount exceeds 23,000 and is completely out of ratio. Voluntary Severange Offering will definately assist to manage the staff numbers and staff with 25years service plus (old P+T staff) will accept the offering. This cannot be regarded as retrenchments, it’s voluntary. This might save the giant (Telkom) from sinking, the ship is to heavy. Hedberg must be given a change to proceed with the plan.

  4. Smartest move Jeff ever made! It would have been a hellish position to be in, taking the flack but not being allowed to fix the problems!

  5. I resent constant innuendo’s by Duncan McLeod in this publications about government “interference” as if governement is an evil institution. Telkom is not the pnly telecom entity in the world where gvernement ha a substial share and say…Singtel, Deutche Telekoms, and may others come to mind. Secondly he cannot produce any evidence to his stupid reamord that “Telkom is trading at a big discount to its net asset value, in part because of investor concerns about government’s involvement in the telecoms group”. In fact in a voltile telkoms market this is a plus and not a negative. A more informed answer is linked to earnings, exposure to risky inventsments (like MultiLinks) etc. Let have more facts and less crap Duncan

  6. What!!!!!! Its really Disheartening…. I pray that God will save Telkom from this mess. Telkom cannot from a very high and stable level crash in a twinkle

  7. What the…! Why on earth would a professional be brought in at great cost to turn a company around if his advice is’nt going to be taken?! I stand amazed and astounded every day at the stupid things those at the helm of companies do. Jeffrey knows what he’s doing, he has the reputation to back it..that’s why he was chosen! So give him a chance, for heaven’s sake! I agree with Isaac, the packages that were going to be offered would have been VOLUNTARY retrenchments…no one has to apply for them if they dont want to! Catch a wake-up Telkom or Government, whoever is responsible for this latest error in judgement!

  8. Richard Sambolec on

    Good decision, Jeff. If you don’t have the full authority to use all of the tools at your disposal as the Chief Exec, there’s not much point in taking the reins. If you plan on staying in SA, perhaps a move to Vodacom SA to take over from Shameel (who is supposed to start at Vodafone Spain on April 1st) would be interesting… Best of luck!

  9. Issaac`s figures are completely wrong, so one would have to assume his opinion will follow the same route….

  10. The only way to turn Telkom around is to reduce the Human Capital. Hedberg was on the right track.

  11. All the best to you Mr. Hedberg, you’ve done a great job thus far.. we solute you. Please be reminded that your staff are behind you, your strategies were well excepted during your roadshows across the country. Do not look back continue with it since you are in power till end March’11. Trim the staff compliment via the safe way of voluntary seperation offering, we are confident that the deadwood will definately be seperated and you can be confident to hand over a much more focussed workforce that fits the strategy going forward. Remember this forms part of your promises to the staff on your Telkom Leadership Roadshows.

  12. Vutha, the ANC government is both evil and incompetent – just look at the mess it has made of Eskom and Transnet. Telkom would probably be even worse under complete govt control than it is now, You are probably a useless jobs for pals cadre, it’s the only way you can defend the track record of our hopeless SOEs and the idiot govemernt.

  13. Serious questions needs to be asked about Telkom performance the last few years, decisions that was taken and nobody is kept acvcoutable for it.

    1) Multi-links was never an viable option from the start, yet somebody in Telkom or the ruling party pusched for this.
    2) Vodacom sale. Was that political motivated or on a sound business decision?
    3) Telkom TV channel went down the drain. Again, who did approve the business case and who is responsible for the loss.

    Mr. Hedberg intentions was to stramline operations but it seems within Telkom soembody was protecting somebody and that can only be that a few heads in high places might have role.

    Telkom workforce is old, no new blood has anter the company for years and therefore the energy levels of the staff is low and effects service delivery. On top of that you drive pass any Telkom building and you will see staff only get to work after 8 and leave work well before 4 to miss the traffic – they are very productive.

    Telecommunication technology might be unique and those still dedicated to the job cannot keepup with the pace and now looking for separting packages or find alternative interventions.

  14. This is very sad, just goes to show that running Telkom is more political maneuvering than anything else……….this is exactly why Reuben September was kicked out, he wasn’t given carte blanche either

    The previous comment by Skottie regarding all the loss making units, it was September who plugged the whole on the the TV Channel as it was not their core business and already indicated it would be throwing money into a bottomless pit

    Unfortunately, because he wasn’t willing to play politics, he is now a casualty, so whoever takes over from Hedberg, brace yourself

  15. skottie has hit the nail on the head.
    8ta will not have any impact in the market and it shows no innovation from Telkom. The ROI will be disappointing.
    But the greatest issue with Telkom is leadership – top heavy with no vision.

  16. Most of the comments I read here are either from people who are completely clueless about Telkom or they must have been eating from Reuben September’s palm.

  17. honestly speaking jeffrey exit will be a great loss to telkom family as the company need a turnarround to survive