An important call for Telkom - TechCentral

An important call for Telkom

[By Duncan McLeod]

Reuben September’s decision to step down early as CEO of Telkom wasn’t unexpected. All eyes are now on the board, which must appoint his successor. Will it make the right choice? Or will the decision be political?

It was probably inevitable that September didn’t stick around at Telkom until his contract ended in November. When the board elected not to renew his contract, the long-serving Telkom executive took it badly, say company insiders. That’s not surprising: who would want to hang on for five months when they knew they weren’t really wanted?

The appointment of Jeffrey Hedberg as acting CEO was not that surprising either. Hedberg, a US national who helped turn around SA’s cellular minnow, Cell C, is well regarded in the telecommunications sector.

If the board were to pick Hedberg as permanent CEO, it would be an inspired choice. Here is an outsider who would bring a fresh perspective to a company in need of it.

Hedberg may also be the right man to take Telkom into battle against powerful adversaries such as Vodacom and MTN.

But Hedberg isn’t the only strong internal candidate. Telkom SA MD Nombulelo “Pinky” Moholi is also a well-respected leader and, according to industry executives, would also do a good job at the helm.

But will the board make the right choice? That’s harder to know. By all accounts, nonexecutive chairman Jeff Molobela was instrumental in ensuring September’s contract was not renewed. The two men fell out; there’s talk that Molobela was behaving like an executive director, interfering in the day-to-day running of the business.

Sources at Telkom say Molobela, a government appointee, had been trying to engineer September’s exit for months. If so, the question is why. Was it because he was genuinely unhappy with September’s performance — Telkom’s financial position did slide badly on the CEO’s watch — or was he acting on instruction from communications minister Siphiwe Nyanda? Does government want to exert more control over a company in which it still holds a 40% stake?

In trying to answer these questions, it’s worth considering that government’s so-called “golden share” in Telkom — which gives it a number of powerful rights — expires in May next year. The golden share, or “class-A share”, entitles government to appoint Telkom’s chairman and have a say in the appointment of its CEO, among other things.

Could it be that government, concerned about the imminent expiry of these special rights, is moving now to appoint a more compliant CEO than September?

If that’s the case, and government intends appointing someone not because they’re the best suited to run Telkom but because they’ll take instructions from on high, then it’s cause for real concern, not only for Telkom shareholders, but also for its customers and the broader economy.

Telkom is at a crossroads. Its monopoly days are over. It’s faced with significant competition for the first time that will require it to be quick at reacting to market changes and competitive threats.

It’s also faced with regulatory interventions that will take away the last vestiges of its fixed-line monopoly.

September made some big and important calls in his time as CEO. He took the brave but arguably necessary step of unbundling Telkom’s stake in Vodacom. He restructured the company, bringing in talented executives like Hedberg and Moholi. And he began the process of building a mobile division.

Whether these initiatives bear fruit, and whether Telkom is able to withstand full competition, depends to a large extent on who is appointed as the next CEO. The board can’t afford to make the wrong choice.

4 Comments

  1. My thoughts on

    Its a shame but i feel this shakeup was needed years ago.
    they had it too easy ..,,..and took it for granted.

    now that the tables have turned see how they run.

  2. It seems that Pinky is of the opinion that to close the access defecit Telkom should increase line rentals. For me, this is game over – it’s so obviously and fundamentally wrong, even to a non-expert like me, that it seems it’d be the same old ideas if she took over.

    Under Hedberg’s watch, CellC continually tried to increase revenue by driving down prices and increasing the number of customers. That’s the kind of person we want running Telkom, surely.

  3. The_Librarian on

    Greg – that’s business 101 for you.

    Unfortunately it seems that the executive mindset in this country is to screw the customer hard for large profits.

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