Ramaphosa comes out for fired workers

ELKOM will not be pushed around by the government, chairman Jabu Mabuza vowed this week.

Speaking to Business Times, Mabuza said the idea that the cabinet would simply decide on a strategy for the company, which Communications Minister Dina Pule would then hand to Telkom to implement, was wrong.

“Telkom is a public, listed company that has got a lot of other shareholders other than government, ” said Mabuza.

“Shareholders don’t give companies strategies. Shareholders approve strategies that deliver the return they expect from their investment. ”

The government — which owns 39.7% of Telkom directly, and another 10.6% indirectly though the state-owned Public Investment Corporation (PIC) — has consistently interfered in Telkom.

It torpedoed a much-needed investment deal that would have seen the South Korean KT Corporation pay R3.3-billion for 20% of Telkom, infuriating executives.

In December, Pule spoke of how Telkom’s strategy would be thrashed out by delegates at the ANC’s conference in Mangaung, and handed the cabinet a proposal for a turnaround strategy — spooking investors who feared government would cause the company to veer off course.

Shareholders were also uncomfortable with the leadership vacuum that arose when chairman Lazarus Zim quit.

Concerns deepened when CEO Nombuleleo ‘‘ Pinky ” Moholi resigned last November, one week after Pule arrived at Telkom’s AGM last October and voted four Telkom directors off the board.

On Thursday Telkom announced that former Vodacom executive Sipho Maseko would fill Moholi’s seat as CEO from April 1, as speculated by Business Times three weeks ago.

The other front-runner for the position, Brian Armstrong, was appointed chief operating officer — presumably so that he would not quit after not getting the top job.

Investors appeared to approve of Maseko’s appointment as Telkom’s shares soared 5.49% to R15 after the announcement.

This did not go close to erasing the 38% drop in the company ’ s stock over the last year but was a welcome sign.

Shareholders will be hoping that Maseko and his team can get on with rebuilding the company without any further government interference.

In January, brokerage JP Morgan said uncertainty over Telkom’s governance, its CEO succession plan and the government ’ s plan for the entity “make the company an unattractive investment”.

‘‘ We struggle to envision a scenario where government’s social, rural [and] broadband objectives can be established at Telkom while still creating appropriate risk-adjusted shareholder value,” it said.

Mabuza said both Maseko and Armstrong had the full support of the board.

“The past culture and interference has destroyed value for all stakeholders,” said David Couldridge, an analyst at Element Investment Managers, which is also a shareholder in Telkom.

“Hopefully, lessons have been learnt and common sense will now prevail. Stakeholders will continue to be cautious until this has been demonstrated. ”

Couldridge said investors will need to see a “wellconsidered strategic plan”, as well as “positive collaboration” with the government on policy and on Telkom’s overall direction.

Mabuza insisted that Telkom now had a strategy that was put together by the board, and would not be waiting for government guidance.

“What we now have is, we’ve got a team, we’ve got the board that gives it direction, and we have a shareholder that understands and appreciates our role,” he said.

Maseko is taking up a position that has become a poisoned chalice in the corporate sector, with the CEO position having gone to three people in the last three years.

Maseko, whose last job was a nine-month stint at Vodacom as MD of Vodacom SA, admitted that “many regard the company as a basket case”, but said he was optimistic he could make a difference.

“The board appointed me so they obviously think there is a contribution that I can make. I think there are a lot of credible people and I am enthused by the appointment,” said Maseko.

As he steps into the role, Telkom is fighting criticism that it is axing much-needed jobs at the same time as it is spending millions in sponsorships, including a R100million deal this month with the Premier Soccer League.

The Communications Workers Union this month threatened to “mobilise all Telkom workers in defiance” of the job-cut plan, vowing that if the company continued to bully staff “they will meet us on the street.”

Mabuza said Telkom was trying to create a leaner, more efficient operation that was more profitable for shareholders.

However, he said there was no “hit list” number of employees that the utility wanted to get rid of.

There are numerous tasks that Maseko will have to manage as he takes charge.

Among the priorities he outlined in an interview with Business Times was the need for Telkom to focus on its data plans for consumers.

Another priority was to expand the market share of its mobile carrier 8ta, which is fourth behind Vodacom, MTN and Cell C.

A sign of Telkom’s strategic weakness is that, despite its dominant position as a fixed-line operator and main provider of ADSL lines to consumers, analysts still rate it as a stock to “sell”.

Data from Bloomberg shows that Telkom’s fixed-line traffic dropped 70% between 2003 and 2011, while mobile operators Vodacom and MTN expanded their revenue from data three times faster than Telkom during those years.

Maseko ’ s main task will be to put Telkom back in the game. FORMER trade unionist Cyril Ramaphosa made his position on workers’ rights clear on Wednesday when he ordered Shanduka Coal management to review its decision to dismiss 250 workers who staged an illegal strike.

“I am vehemently opposed to the mass dismissal of workers involved in industrial action,” said the man behind the creation of the National Union of Mineworkers in the early 1980s.

“I knew there was a strike, but not that there had been any dismissals.”

Speaking from the Brics summit in Durban, one of South Africa’s wealthiest men and the deputy ANC president said the workers would be reinstated by Thursday.

“Problems that give rise to such action can always be remedied by discussion and negotiation, ” he said.

National Union of Mineworkers spokesman Lesiba Seshoka said workers were reinstated on Wednesday night, but a source close to Shanduka said they would be reinstated after an appeal and provided they were not in- volved in violence. He would not say who Ramaphosa spoke to at Shanduka Coal.

Ramaphosa walks an increasingly taut tightrope as a former champion of workers and now the face of capital.

His election as ANC deputy president at Mangaung last year was due partly to his appeal to business and labour. It also marked his political comeback after he quit politics in the late 1990s, when he was overlooked to lead the party in favour of Thabo Mbeki. He then embarked on a business career that made him one of South Africa’s richest men.

Now Ramaphosa has to publicly balance the demands of often polarised drivers of the country’s fortunes.

He recently came under scrutiny on issues that raised questions about his affiliation with workers and threatened to sully an impeccable business reputation cultivated over a decade and a half.

Last March, Turkcell said Ramaphosa was party to the bribing of Iranian politicians to ensure MTN — of which he is chairman — was given the cellular licence in that country. Turkcell’s claims, as far as Ramaphosa was concerned, were opportunistic at best, and did not stick.

Late last year, Ramaphosa faced a strident charge of being in conflict of interest when Shanduka, the group of which he is founder and chairman, bought a $33-million stake in MTN Nigeria. MTN Group owns 79% of MTN Nigeria.

However, despite the deal raising the hackles of corporate governance advocates, Ramaphosa could defend himself as he had declared his interest to the MTN board and did not participate in talks on the deal. Shanduka did the deal with the private equity consortium selling the stake, not with MTN directly, putting greater distance between him and the cellular company.

His response this week to the dismissal of the Shanduka Coal workers indicates a con- tinued allegiance to labour.

But, a few months ago, Ramaphosa came under fire from the ANC Youth League during the Farlam inquiry into the Marikana tragedy.

He was until recently a nonexecutive director of Lonmin. This is because Shanduka owns 9% of Lonmin through its 50% stake in Incwala Resources, the company ’ s BEE partner.

Dali Mpofu, for the families of the dead and injured miners at the inquiry, brought up an e-mail between Ramaphosa and Lonmin management in which Ramaphosa described the fateful protests as criminal acts and suggested taking “concomitant action”.

The league called for his arrest for his alleged part in the massacre. That was probably not so surprising, given that Ramaphosa chaired the appeals committee that ejected former league leader Julius Malema from the ANC.

Since his election as ANC deputy president, Ramaphosa has resigned as non-executive director of Lonmin and said he would step down as joint chairman and non-executive director of Mondi Limited and Mondi plc in May. This week, he told SABMiller he would retire from its board as an independent non-executive director in July.

Ramaphosa is still on the boards of more than 10 companies, many of which are affiliated to Shanduka, the company he founded in 2001.

He is chairman of MTN, Bidvest Group, Millenium Consolidated Investments, Vancut Diamond Works, KreditInform, Sasria and Shanduka.

As ANC deputy president Ramaphosa has to declare his interests in the companies he is involved in, but he is under no legal obligation to resign from them.

However, after Mangaung, he assured South African business that he would address any potential conflicts of interest involving his role as ANC deputy president and his position in many companies.

His presence on the boards of blue-chip companies until now illustrates how comfortable the corporate sector is with Ramaphosa.

His challenge is now to reassert his moral authority among workers and the wider population. His actions this week for the workers of Shanduka Coal are a step in that direction.