Feathers fly at Telkom AGM

[Sting]

http://www.fin24.com/Companies/Feathers-fly-at-Telkom-AGM-20100824

Johannesburg - Telkom [JSE:TKG] shareholders have accused the group of poor corporate governance at the company's annual general meeting held on Tuesday, arguing the firm does not have enough independent directors.

Concerns were raised over Telkom's failure to comply with the King III corporate governance framework, specifically with regards to the constitution of the Telkom board.

Shareholder activist Theo Botha said King III principles should have been adhered to since March 31 when it came into effect, adding Telkom had also failed to provide reasons for its non-compliance.

The crux of the matter is the fact that the Telkom board does not have sufficient independent directors, according to King III requirements. It has overwhelming representation from class A shareholders, specifically those representing government, which holds 40% of the company.

"King III is not onerous and if any principle is not adhered to, reasons must be provided," said Botha.

He said reasons for non-compliance were not provided in the group's annual report.

Telkom board chairperson Jeff Molobela responded: "King III ranks after your (company) articles, which are specific on that issue. We cannot put King III ahead of our articles, which are the legal documents of the company."

Botha responded: "Your articles seem to be inhibiting good corporate governance."

Said Molobela: "Corporate governance is a system of procedures to ensure there is no corporate failure or underperformance.

"I do not see how this specific item would lead to corporate underperformance or failure. Shareholders are at liberty to point out issues on directors' remuneration."

David Couldridge, investment analyst at Element Investment Managers, followed Botha's questioning, adding that his company had commissioned an independent survey of Telkom's corporate governance - undertaken by Avior Research - that rated the group's compliance as poor.

Anton Klopper, group executive of legal services and member of the Telkom board, responded that the group's current compliance standing relates to shareholder rights instated eight years ago that cannot be amended without a memorandum of incorporation.

These original rights lapse in March 2011. Articles will therefore be amended next year, resolving the ambiguity in the group's standing in terms of King III.

"All companies with financial year-ends in March need only comply in March. As our year ended in March 2010, we could not comply with King III and will do so in March 2011," said Molobela.

Move to resume AT&T talks

On the sidelines of the company's AGM, acting CEO Jeffrey Hedberg told Reuters Telkom is looking to restart talks with AT&T Inc about its Africa partnership, which has so far brought little business.

Hedberg also said Telkom was not looking for new acquisitions at present.

Telkom agreed in April 2009 to work with AT&T to provide IT and telecom services in Africa in a bid to win business from foreign firms expanding on the continent, but so far the partnership has failed to secure many contracts.

"The partnership (with AT&T) to date has not progressed to an extent we would like," Hedberg said, adding the problems stemmed from issues related to pricing and after-sales support.

"I am going to re-ignite discussions with AT&T," he said.

Telkom in April 2009 signed a memorandum of understanding with AT&T that would allow the US firm's clients in Africa to use Telkom's internet-based network on the continent.

Telkom's network - built by acquiring companies such as Kenya's Africa Online and MWeb Africa - was to be linked to AT&T's global network, helping it win business from AT&T's customers.

The company is now focusing on existing customers, not acquisitions or chasing new licences, Hedberg said.

"We now know what we want to do with our South African customers... they need to be serviced in Nigeria, Nairobi. That's where much stronger focus is going to be now, rather than buying a third mobile licence in Cameroon or a fourth licence in Zimbabwe," he said.

Telkom has announced an ambitious R6bn plan to enter South Africa's competitive cellphone market, a move analysts have said would be difficult.

"We are working very hard and remain committed to launch our mobile before year-end," he said.

 

[bleh69]

omg! they have feathers!

 

[Sting]

omg! they have feathers!

Winston?

 

[RazedInBlack]

Another attack on Telkom?

are you people bored?

 

[Sting]

This one is almost justified. Also remember the "attack" is more on the Board and the Main Shareholder as strictly speaking they are not conforming to the King III governance requirement.

It is also the first step to force government to relinquish control of Telkom via its "golden vote".

 

[Imminent]

nice I vote sticky this post or atleast I will put it in my account profile

 

[Sting]

Shareholders up in arms over Telkom governance

Follow up report... cannot wait for the 'golden share' to disappear.

http://www.timeslive.co.za/business/article626943.ece/Shareholders-up-in-arms-over-Telkom-governance

King code author highlights 'golden shareholder' as primary problem, writes Jana Marais

Aug 29, 2010 12:00 AM | By Jana Marais

It will take "six months or so" to find a permanent replacement for CEO Reuben September, Telkom chairman Jeff Molobela told shareholders as he faced fierce criticism about a lack of leadership at the telecommunications company

Telkom was slammed forpoor corporate governance at its annual meeting this week, and a lack of leadership and proper risk management was blamed for the poor share performance. Telkom shares are trading at half their net asset value, which is a much deeper discount than for comparable international telecommunications companies.

"Clearly something is wrong," said David Couldridge, an analyst at Element Investment Managers. "There have been too many distractions; too many changes to the board and executive management. What is required is a strong, balanced, diverse board with the appropriate business skills."

Telkom has experienced a steady exodus of board members and senior executives over the past year; the latest was financial director Peter Nelson, who surprised the market on Thursday by announcing his immediate departure. Nelson had resigned days after September's ousting in July, but was set to continue until October.

Accusations of interference by Molobela in the day-to-day running of the company led the board to appoint KPMG to investigate the matter in July. Molobela said it would "take a while" for matters to settle down.

Couldridge was blunt in his assessment of Telkom: "What needs to be done is not complex. They need a sound strategic plan and get on and do it," he said.

Nigerian telecoms operator MultiLinks, for example, has been a financial disaster for Telkom, with write-offs of R5.6-billion in the past financial year. "They need to make a decision: are they going to sell it, or are they going to try and generate value? If they decide on the latter, then put the plan in place, get the right people and do it," he said.

Telkom, which must open its local exchanges to other operators next year, faces increasing competition in its declining fixed-line business and needs alternative revenue sources. It plans to launch mobile operations before the end of the year, acting CEO Jeffrey Hedberg said.

Molobela described Hedberg, Telkom's fourth CEO in five years, as a "breath of fresh air", but he refused to say whether Hedberg, initially hired to fix MultiLinks, would get the post permanently.

The government's 39.8% "golden share" in Telkom is seen as a key reason for the corporate governance challenges because it means the government can appoint five of the 12 directors, including the chairman. But the government's special rights lapse in March 2011 and there was no indication they would be extended, Molobela said.

Mervyn King, chairman of the King committee on corporate governance, said Telkom was a good example of "corporate schizophrenia". The company does things to satisfy its golden shareholder though these may not be commercially viable - such as installing unprofitable landlines in under-serviced areas - while simultaneously trying to increase profits for other shareholders, he said.

"The board and senior management need to be on Prozac permanently," King said. But he added that the expiry of these special rights should improve governance at the company. "It just has to improve - it will be coming off a very low base."

 

[TheGuy]

Telkom, which must open its local exchanges to other operators next year, faces increasing competition in its declining fixed-line business and needs alternative revenue sources. It plans to launch mobile operations before the end of the year, acting CEO Jeffrey Hedberg said.[/url]

Ok what does this mean?

But the government's special rights lapse in March 2011 and there was no indication they would be extended, Molobela said.[/url]

What would be different if the Goverment's "special rights" is not there anymore?

 

[marine1]

Maybe the ex DG will now have a job

 

[nakedpeanut]

I'm unemployed! I'll gladly take over the job

 

[Sting]

1. Ok what does this mean?

2. What would be different if the Goverment's "special rights" is not there anymore?

1. LLU
2. It will mean that Telkom can be run as a business and not as a political tool to win votes or be a charity organisation or as a Africa outreach program or as a source of enrichment for comrades via juicy tenders and contracts...