Fin24

Moholi adds to Telkom exodus

2012-11-05 14:34

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 directors.

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 access.

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 cuts.

Mobile failings

Stung by declining fixed-line usage and an expensive, failed attempt at expansion into Nigeria, Telkom has struggled to boost flagging earnings.

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 its launch.

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 experienced person."

Telkom shares were down 3% to R17.65 by 12:00 GMT, lagging behind a 0.4% decline in the broader All-share index.

 

Comments
  • Eterni80 - 2012-11-05 14:45

    this article could just as well be about SAA..

      ianon.ym - 2012-11-05 14:54

      Employ incompetence, result - Under Moholi, the company has lost more than half of its market value. WTF are you doing.

      brian.connell.18 - 2012-11-05 15:38

      When the "CEO" thinks that he or she has fleeced enough money, safely put away in off-shore accounts, he or she then leaves in order to give another one of their mates a crack at it. It's called affirmative salary negotiations. In more normal countries, it is also referred to as fraud and corruption.

  • attie.mostert.9 - 2012-11-05 14:45

    Hahaha, what a joke

  • sam.swanpoel - 2012-11-05 14:49

    Such a pity its not happening at ESCOM

  • hitting.thefan - 2012-11-05 14:52

    The ANC are the custodians of the state parastatals and te hen they go and act if it is there property. They are ruining everything they touch and will only be satisfied when there is nothing left and after all that they will blame apartheid. These cadress are incompetent and arrogant. They are operating in arenas where they are out of there depth just like our president Mr. Showerhead

  • gerald.majola.7 - 2012-11-05 14:55

    Steal, then leave. Ayoba!!!

  • craig.lebelo - 2012-11-05 14:57

    all the parastatals are paralized.

  • pierre.walt - 2012-11-05 14:59

    Experienced person?

  • yar.wellnofine - 2012-11-05 15:03

    Let's do something radical. Something so outrageous that everyone is stunned into silence. Let's put a businessman in charge of a business. Let's gamble on not using a re-deployed cadre.

  • greypatriot - 2012-11-05 15:03

    FIXED LINE IS DEAD. WIFI ROCKS. CHANGE THE TECHNOLOGY AND CHANGE THE FUTURE OF THE COMPANY. OTHERWISE A STONE OF REMEMBRANCE WILL BE NEEDED.

  • gazaspells - 2012-11-05 15:04

    the government needs to take decided action to turn around telkom, irregardless of the many problems that plague this quasi state owned/public listed company . Telkom is the best fixed telkoms operator in africa, well one would say, lets compare ampples with apples, since the rest of africa does not compare with sa. they need to retain talen, this lady was a good move since she knew telkom inside out. from what i read in the book good to great by jim collins, the only way to build a great company is to have an inhouse person to be the ceo.

  • Montagnes.Bleues - 2012-11-05 15:05

    When will Gigaba present the followers with lest estimate R30billion rescue gift? uguh uguh buuguh, minus R3billion for #zumaville and #nkandla palace of the herdboys

  • Kirsten Jeanette Olivier - 2012-11-05 15:16

    yip!that's why you should have taken the Korean's offer and we would been getting ahead with better internet, better services and ect. aaaiii!aaaii! Government...

  • mmoledis - 2012-11-05 15:31

    The government maybe has their reason to not have allowed that buy out stake to take place, as they are main share holders, but for the sake of creating jobs they could have allowed that to happen and only if that company will not cut jobs and increace the number of unemployment in the country, we want all government businesses to creat more jobs for citizens than individualy owned companies.

  • pierre.durandt.98 - 2012-11-05 16:03

    The problem is not Pinky... she actually has a good reputation within the industry. The problem is that her hands are tied by government' ill-conceived policies. But Telkom does still have an important role to play in SA's telecom's future but not in its current shape. My opinion is that we can let government keep their 40% stake on condition that Telkom becomes a 100% wholesale company that only sells capacity to other licensed operators at a reasonably low but sustainable price. In that way, any licensed operator will be able to tap into all the lucrative existing infrastructure and provide competitive services to end users. Government will really then be giving the industry and SA consumers a big boost towards finally realising a market driven and fully deregulated telecommunications industry that everybody both wants and deserves!

  • james.stevens.391420 - 2012-11-05 16:15

    earn easy money by just clicking on ads http://www.clixsense.com/?4552112

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