It is not up to government to devise a strategy for Telkom or for it to impose its will on the company. Rather, it’s up to management, through the board of directors, to develop a strategy and sell that to all shareholders, including government.
That’s the view of newly appointed Telkom chairman Jabu Mabuza, who was nominated on Friday to replace Lazarus Zim, who stepped down at the company’s annual general meeting last month.
“The way I see it is the day shareholders give you a strategy, they may as well come and run the business,” he says. “Management, through the board, and informed by various stakeholder expectations — not least customer requirements — must come up with strategies.”
That said, Telkom’s strategy will be informed by government policies. “I don’t see government as a shareholder any differently to the other shareholders,” he says. “I see government as the policy-setting body in the country.”
However, government’s role as a shareholder must be in line with other shareholders and the state must not impose a strategy on Telkom’s board. “It cannot work that way,” he says. “Government, as a shareholder, has to persuade other shareholders … [to approve or not approve] what the board puts in front of them. This is a listed company.”
Communications minister Dina Pule has put forward a number of proposals to cabinet, including a recommendation on what she believes should happen to Telkom. One of the options that had been under consideration is the nationalisation of the company by government buying out minority shareholders and delisting the company from the JSE. It’s not known if that is one of the proposals submitted or when cabinet will make a decision.
“I will be calling for a meeting between the board and the government as a major shareholder to hear [from them and] share with them where we are at,” Mabuza says. “Telkom has its own commercial strategy to deliver on its business plan. We are not waiting for a strategy to be sent from government.”
Government is entitled to express its “wishes and preferences” as a shareholder. Where these are not met to its satisfaction, it can “use its shareholding to influence other shareholders … to get a majority to dispose of the board”.
“If that happens, that’s fine, because the people that will lose or gain are the shareholders,” he says. “It’s your business; do with it what you want. Break it down if you want to.”
He adds that “certain elements of government may think we are 100% owned by government, but that is not the truth. Government is not the only shareholder.”
However, Mabuza stresses that his approach to government will not be confrontational. There has “clearly” been a “big disconnect between the shareholders and the board of Telkom”, he says. “Some of the things I read about what happened in the build-up to and post the AGM makes it clear that a chasm has developed.”
He adds that government’s socioeconomic goals do not necessarily run contrary to the expectations of private investors. “Those things are not mutually exclusive,” he says. “You can do good business, eat well and sleep well. All that business wants is policy certainty so that we all know that this is the policy framework in which we will operate. Policy certainty for us is critical.” — (c) 2012 NewsCentral Media
