Her tenure at the top got off with a bang. Rumours had been swirling of a potential equity deal with an Asian telecoms player and things were looking up. But when Government blocked South Korea’s KT Corporation’s R3.3bn bid for 20% of the company earlier this year – the writing was on the wall.
The group’s share price is half of what it was this time last year. Telkom CFO Jacques Schindehutte has warned that Telkom’s financial viability is at stake.
Veteran stockbroker David Shapiro at Sasfin Securities lacks even the patience to see whether or not the firm can realise its potential: “People keep talking about the amount of copper in the ground and how they have access to every home in South Africa – this company needs capital and with a market cap of R9bn, I really don’t know where they are going to get it from.”
The Telkom board itself was practically non-existent when Moholi quit. Actually, she made her plans known before she could officially step down as there was no quorum of the board to which she could resign.
In addition to the scheduled retirement of three non-executive directors, including chairman Lazarus Zim, Government and the PIC, which together control more than 50% of the company, Government with a 39.8% stake held via the Department of Communications and 10.9% via the PIC, had voted against the appointment of four non-executives, including Sibusiso Luthuli, who was to become acting chairman. There were some eight board vacancies.
Subsequently, BUSA chairman Jabu Mabuza has joined the board and agreed to chair it. He admits he may be on a hiding to nothing but says he accepted the call as he believed it was the right thing to do. He’d fully intended focusing on personal projects last year when he drew the curtain on Tsogo Sun. Now,
however, he ’ s firmly back in the fray.
Among the many tasks facing the new chairman is finding a new CEO.
Remuneration is not unattractive. Moholi was paid R12m last year. Share options at current levels could appreciate substantially should management be allowed to get on with the job of running the business. In that, however, lies the risk. Mabuza knows it and has already thrown down the gauntlet to Government, which he says needs to define policy but butt out of daily management. Board tenure, however, is vulnerable as was demonstrated at the recent AGM where directors who’d been on the board for as brief ly as eight months found themselves voted off. It’s going to take more than just a chairman with “testicular fortitude” as Mabuza put it the day he was appointed to get the firm back on track.
Moholi’s successor will need to tread the increasingly hard-to-read line between executive responsibility and State interference. The place is dominated by strong unions making it difficult to rightsize the business and to focus on delivering services to South African corporates and to rescue what’s left of a disillusioned domestic market.
The country’s competition authorities are also refusing to let up on tightening the screws on Telkom. The Competition Commission wants the R449m fine for anticompetitive behaviour against it raised. The Commission had sought a R3.5bn fine but its own Tribunal levied the final amount at R449m accepting that a higher amount could jeopardise Telkom’s existence.