Whispers aside
The walls held the secret of what had gone down at the previous Thursday’s board meeting. However, as with most high-profile resignations only those who were there will probably ever know what really happened.
Meanwhile, speculation has inevitably been rife. A number of factors have been widely cited as reasons for Molotsane’s resignation, but that it related to a combination of those – including shareholder and Government pressure, as well as some disagreement over strategic issues – is probably close enough to the truth. He may personally also just have had enough of it all.
But as the whispers die down the reality is that Telkom needs a new CEO. And there are lessons it can learn from the experience. Foremostly, that it’s extremely difficult to run a telco, particularly one facing the pressures of a deregulating environment, without any telecommunications experience.
Although some have lauded as a good decision the appointment of Reuben September in a temporary capacity, others believe Telkom must now put an internationally experienced appointee at its helm. One fund manager says Molotsane’s replacement should be someone of the calibre of Vodacom CEO Alan Knott-Craig, with experience in deregulating markets and in fixed/mobile environments. For that, Telkom would mostly likely have to pay up. However, making such an appointment could be in everyone’s best interests, he says.
Perhaps Vodafone – 50% shareholder in Vodacom – could use the opportunity to put forward someone from its global talent pool, he suggested (Telkom owns the other 50% of Vodacom).
As it did with Molotsane’s appointment about 18 months ago, Telkom will most likely look internally and externally for a replacement. Group executive for corporate communications Lulu Letlape says the board had yet to meet to decide on the process.
Molotsane, as much documented previously in Finweek, was considered a likable guy but failed to garner the respect of the investment community as a heavyweight CEO. With a background at Transnet, Molotsane was on the back foot from the word go but took up the challenge of learning about the environment enthusiastically and unflinchingly. At public appearances he always spoke self-assuredness – but in well-rehearsed, broad brushstrokes. International investors in particular didn’t seem convinced.
His contract with Telkom would have contained a series of deliverables. He must have been satisfying those, at least initially, or he wouldn’t have been paid a R3,4m performance bonus for his first seven months in office. Information on what his salary amounted to for the 2007 financial year (which closed on 31 March this year) will be detailed in Telkom’s next annual report and could prove instructive.
That many fund managers were unaware of Molotsane’s resignation until the Stock Exchange News Service announcement rules out the possibility that they actively called for his head, despite many well-documented concerns with regard to his strategy and ability to execute.
As the biggest shareholder – with 38% – pressure from Government is inevitable. The push-pull of a major shareholder with the dual motive of high profits and lower costs makes the job of Telkom CEO an unenviable one.
With the national interest in mind, Government recently rebuked Telkom twice publicly.
Government also has a say in the boardroom, although the extent to which its five non-executive board appointees influence Telkom’s strategy remains a mystery and an inherent problem for many fund managers. The presence of other independent representatives on the board, such as advocate Brahm du Plessis and Lazarus Zim (previously at Anglo American, and MTN before that) must have to some extent tempered any Government influence.
However, Zim resigned just days after Molotsane. The explanation – commitments to his company Afripalm after it bought a 31% stake in Tokyo Sexwale‘s Mvela Resources late last year – appears perfectly valid.
But can the departure of two exco members – Wally Beelders and Thami Msimango – within the space of a few weeks be coincidental?
Current Telkom chair Shirley Arnold, a member of the Chairperson’s Forum of the Gordon Institute of Business Science and the Institute of Directors among others, replaced Nomazizi Mtshotshisa in November last year. However, she’s been silent on Molotsane’s departure at a time when people might expect the company to offer some assurance.
The market and the public – all stakeholders in Telkom through its major shareholder and many of whom are customers of Telkom – will be looking for confidence, experience and vision in a new CEO.
Podcast about Molotsane’s departure
Finweek
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