Wake-up call
Pressure has been mounting on Telkom from several quarters simultaneously, and investors’ entirely correct perception is that change at the top may be the catalyst that is required to force the utility to respond in a manner that secures the company’s long-term future.
The competitive environment in telecommunications is changing rapidly, partly through deregulation and partly because technological advances will eventually render much of Telkom’s existing competitive advantage irrelevant. The utility’s shareholders know this and had every reason to be jittery since Molotsane showed little sign of understanding the need for decisive management at this crucial stage of the company’s history.
Telkom’s fixed-line monopoly is under real threat for the first time, margins are being squeezed and government is becoming increasingly intolerant of SA’s high telecommunications costs. President Thabo Mbeki went so far in a recent interview with the UK’s Financial Times as to accuse Telkom of profiteering.
Something had to give, and we now know that it was Molotsane. However, replacing the CEO will not fix the fundamental problem that Telkom faces, which is that it still has the mindset of a parastatal, and a monopoly to boot. Molotsane was starting to make some progress in establishing a service culture at Telkom, but this will prove meaningless if the company is not radically restructured to cut costs.
Chief operating officer Reuben September, who was hastily appointed acting CEO last week, is an able executive who has been around long enough to keep Telkom on track during the transition. But a steady hand and more of the same is precisely what the company does not need right now.
There is a strong argument for the appointment of an outsider with a proven track record in management, possibly a foreigner who is not carrying political baggage and can therefore take the tough decisions circumstances demand.
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