Adding clout

Share­hold­ers vote to change the board

Finweek English Edition - - Companies & Markets - BELINDA AN­DER­SON be­lin­daa@fin­week.co.za

TELKOM SHARE­HOLD­ERS re­cently voted to em­power the com­pany to change its board – which freed it to add clout and add telecom­mu­ni­ca­tions ex­per­tise. The vote took place at a meet­ing specif­i­cally ad­journed to en­able the board to change its old ar­ti­cles of as­so­ci­a­tion and ap­point an ad­di­tional di­rec­tor – 12 in­stead of the 11 pre­vi­ously al­lowed for – and to fill va­can­cies with­out hav­ing to wait for an AGM to do so.

Telkom cur­rently has the seem­ingly lu­di­crous po­si­tion of a chief fi­nan­cial of­fi­cer who doesn’t sit on its board. The amend­ment would en­able it to change that. The group swiftly an­nounced a new ap­point­ment days af­ter the meet­ing: Peter Jou­bert as an in­de­pen­dent nonex­ec­u­tive. Jou­bert pre­vi­ously chaired Im­pala Plat­inum, and Afrox be­fore that, among his other di­rec­tor­ships.

Af­ter the most re­cent ap­point­ment Telkom now has 10 direc­tors and there­fore could po­ten­tially ap­point an­other two. Only one of those – CEO Reuben Septem­ber – is an ex­ec­u­tive, the re­main­der are non-ex­ec­u­tive.

Gov­ern­ment, with its 39,76% stake in Telkom (oth­er­wise known as the A class share­holder), has the right to ap­point five direc­tors. The Pub­lic In­vest­ment Cor­po­ra­tion (PIC, oth­er­wise known as the B class share­holder) has the right to ap­point one. The PIC holds a 16% stake and is rep­re­sented on Telkom’s board by its CEO Brian Molefe.

Al­though wel­come – in­vestors have long called for there to be more tele­coms ex­per­tise – the tim­ing of the board changes does seem a lit­tle curious, given the loom­ing cor­po­rate ac­tion that could see Telkom sell­ing its mo­bile and fixed line as­sets.

How­ever, Re­nais­sance Spe­cial­ist Fund Man­agers’ port­fo­lio man­ager Khulekani Dlamini says it’s ac­tu­ally well timed. “With all the po­ten­tial cor­po­rate ac­tiv­ity, it would be key to have the guy with the han­dle on the num­bers sit­ting around the board­room ta­ble.” Dlamini also says there was a stage when a num­ber of ap­point­ments were made of peo­ple with no tele­coms ex­pe­ri­ence but which seemed merely Gov­ern­ment ap­pointees. Chang­ing the ar­ti­cles of as­so­ci­a­tion meant an op­por­tu­nity for bet­ter cor­po­rate gov­er­nance, Dlamini says.

Some share­hold­ers were dis­ap­pointed to see highly re­spected for­mer Mass­mart CEO Mark Lam­berti re­sign from the Telkom board in June this year af­ter a year of ser­vice. But Lam­berti told Fin24 on his de­par­ture that there was noth­ing sin­is­ter in his step­ping down: he’d sim­ply de­cided to do some­thing to serve his coun­try but had never in­tended to con­tinue in­def­i­nitely.

Lam­berti says dur­ing his ten­ure Telkom had made a lot of progress in tran­si­tion­ing from a pub­lic util­ity to a fully-fledged listed com­pany. Asked whether the board func­tioned ef­fec­tively, Lam­berti says it recog­nised there was an im­bal­ance be­tween the num­ber of in­de­pen­dent and non-in­de­pen­dent direc­tors, as well as a skills im­bal­ance, but it was work­ing hard to change that.

The re­cent changes are ev­i­dence that Telkom is do­ing as Lam­berti said it would.

Changes are well timed. Khulekani Dlamini

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