Mystery of vanishing executives will loom over Telkom results
|June 12, 2007|
All eyes will be on Telkom and its subsidiary Vodacom tomorrow as they release their annual financial results.
However, the intense interest will not be about the companies’ impressive numbers. Investors are expected to demand explanations of, among other things, Telkom’s recent wave of resignations, including that of chief executive Papi Molotsane.
The departures come as Telkom desperately needs opportunities to diversify its business to offset falling fixed-line revenues.
This month the fixed-line operator lost its third top executive, Steven Hayward, the managing executive of retail marketing. Two months ago Wally Beelders, the chief of sales and marketing, and Thami Msimang, the chief technical officer, left Telkom to join Vodacom’s new internet service provider company.
Their resignations were followed by Molotsane’s in April. There has been no explanation from the company about his sudden departure. Reuben September, Telkom’s chief operating officer, was appointed acting chief executive and subsequently appointed to the company’s board.
An insider said there was "uncertainty" within the company because of the executive vacancies.
The chief financial director, Kaushik Patel, was the only one holding a permanent position and the other five were in acting posts.
Khulekani Dlamini, a portfolio manager at Renaissance Asset Managers, said investors were worried about the resignations. "We keep getting told there are quality people a few layers down. We have seen … people like Thami Msimang coming up as relative unknowns and showing some great talent," said Dlamini.
"Management has to do a lot more reassuring; even an organisation with great depth in human capital eventually runs out of it if the talent keeps leaving."
Rajay Ambekar, a portfolio manager at Cadiz African Harvest, said the string of resignations was "worrying". Shareholders needed explanations. Remuneration could be a factor behind the resignations, as there was a shortage of experienced people, he said.
The government’s majority shareholding, which gives it about six members on the board, has been blamed for holding down salaries at Telkom.
Both Ambekar and Dlamini said it would not be easy to find replacements within the country because of the limited skills pool, especially in the fixed-line industry. "I think they must be a little bit more pre-emptive and creative in their talent retention, though," said Dlamini.
Telkom shares added 2.2 percent to R179.99 yesterday. The Top40 index rose 1.41 percent.