Johannesburg - South Africa's biggest fixed-line phone
company Telkom [JSE:TKG] lost its fifth chief executive in seven years on
Monday, less than a month after the departure of its chairman and several
The future of the state-controlled telecom, whose shares are
down 40% this year, has been thrown into doubt by tentative government plans to
renationalise and force it to push through a costly expansion of rural internet
The government in June also rejected a $385m bid for 20% of
the company from South Korean group KT Corp.
Telkom, the bigggest fixed-line operator in Africa, said
that Chief Executive Nombulelo Moholi had given her six months notice, meaning
she will depart in May, about a year before her contract was due to expire.
The government - which owns a near 40% stake and a further
10.5% through the state pension fund - has discussed ways to finance a buy-out
and its communications minister is due to present a report on the company's
future to cabinet.
"Telkom is quite a key asset for government. Since the
failure of the KT Corp deal, things started not to look great for Telkom,"
said one analyst who did not want to be named.
"Based on that, and the strained relationship with the
government, maybe she (Moholi) decided to just step down."
Telkom's chairperson and several board members also departed
following an annual general meeting last month.
Analysts have said the rejection of KT's offer underscored
the government's determination to keep control of a company that many in the
ANC view as a direct arm of the state.
Local media had said Moholi's predecessor stepped down
because the government blocked him from making sweeping changes, including job
Stung by declining fixed-line usage and an expensive, failed
attempt at expansion into Nigeria, Telkom has struggled to boost flagging
It has launched an expensive mobile phone unit that has
struggled to win customers in a market dominated by Vodafone unit Vodacom Group
[JSE:VOD] and MTN Group [JSE:MTN].
The mobile business has yet to turn a profit two years after
Under Moholi, the company has lost more than half of its
market value. The stock is down nearly 40% so far this year, compared to a near
20% gain on the JSE stock index over the same period.
Telkom did not give a reason for Moholi's departure and a
spokesperson declined to comment further on the company's statement, which said
operational abilities would not be impacted.
"It was quite difficult to carry on doing a job with everything
that has been happening at the board and shareholder level," said Steve
Minnaar, portfolio manager at fund manager Abax Investments.
"It is unfortunate because they are losing another
Telkom shares were down 3% to R17.65 by 12:00 GMT, lagging
behind a 0.4% decline in the broader All-share index.