The ongoing poor performance at Telkom’s Multi-Links subsidiary in Nigeria may have been the trigger that group chairman Jeff Molobela needed to engineer the exit of the group’s CEO, Reuben September.

Telkom announced on Friday that September will leave the group when his contract expires in November.

Relations between September and Molobela, appointed last year by government to replace Shirley Lue Arnold, have long been strained, several separate sources have told TechCentral.

According to one source, Molobela earlier this year warned September publicly that he should “not forget that your contract is up for renewal”.

This was after September apparently raised concerns that Molobela had refused to sign his engagement contract and was “behaving like an executive chairman”. Molobela is a nonexecutive director.

Insiders say Molobela has designs on September’s job as group CEO. They say also that he is proving to be a destabilising force at the fixed-line operator.

A Telkom spokesman says Molobela is not available to talk to the media. TechCentral could not immediately reach him through his office at Telkom.

The mounting problems at Multi-Links appear to have prompted a dramatic management shake-up at the group.

The acquisition has turned into what one company insider has described as an “unmitigated disaster” for the fixed-line operator.

Telkom may even have to abandon the Nigerian market.

The mounting problems at Multi-Links are already believed to have cost long-serving and well-respected Telkom executive Thami Msimango his job.

Msimango, who left the group last month — after taking what Telkom described as a “voluntary retrenchment package” — was installed as caretaker CEO at the Nigerian company until the recent appointment to that position of former Cell C CEO Jeffrey Hedberg.

Msimango, who could not be reached for comment on his mobile phone, was MD of Telkom’s international business, one of three key legs of the group.

Telkom issued a profit warning in May, in which it said operating losses at Multi-Links in the financial year to 31 March 2010 were expected to be even worse than the already poor numbers reported in the 2009 financial year.

The group overpaid for the Nigerian business and has now been forced to impair goodwill to the tune of R2,1bn. It will also impair Multi-Links assets worth R3,2bn as a result of the “continuing poor performance” at the company.

Analysts say Telkom made a strategic blunder by getting into the so-called “code division multiple access” (CDMA) market in Nigeria, where GSM operators such as MTN and Glo Mobile dominate the landscape.

Investors will now be wondering whether Multi-Links is worth saving. Telkom’s annual results presentation in the third week in June looks set to be a stormy affair. — Duncan McLeod, TechCentral