Vodacom stunned South Africa last week when it announced that current CEO Pieter Uys will be replaced as Vodacom head by Shameel Joosub.
Joosub is the current CEO of Vodafone Spain, and previously served as the MD of Vodacom. He is well-respected among the local investor community, and his experience at Vodacom made him a logical successor to Uys.
However, the fact that Joosub is a worthy leader to fill Uys’ shoes did little to silence questions about why Uys so suddenly decided to leave Vodacom.
Uys told Moneyweb that, when he was appointed as CEO, he always knew that he would be in that position for three to five years, before he had to change.
Uys further pointed to a lifestyle change and the possibility of moving to Stellenbosch. “My son is currently in matric and wants to study at the University of Stellenbosch next year. We are thinking of moving with him to Stellenbosch,” he told Moneyweb.
When the term “lifestyle change” is mentioned, especially in relation to a CEO who is in the prime of his life and who has produced excellent results and leadership to the company, the alarm bells go off.
Unsurprisingly, speculation on the real reasons behind Uys’ resignation started circulating, and the most prominent rumour suggest that Uys had battles with Vodacom’s parent company Vodafone over Affirmative Action (AA) and Black Economic Empowerment (BEE) related issues.
Uys’ performance as CEO
Uys lead Vodacom to its listing in May 2009, and has shown annualised returns of 28% to investors since it listed. To show exactly how good Uys was at his job, one can compare Vodacom’s performance to its closest rival, MTN.
Moneyweb editor Ryk van Niekerk showed that if you invested R1,000 in Vodacom on the first day of the listing, and reinvested dividends, you would now have R2,115.
Van Niekerk said that MTN, in comparison, had an annual return of 10%. This means that a R1,000 investment would have grown to approximately R1,328.
Vodacom’s financial performance, therefore, dwarfed MTN’s comparative figures over the same period, despite the fact that MTN has shown good returns in its own right.
Van Niekerk further highlighted that Vodacom grew its subscriber numbers from 39.6 million in 2009, to 48 million under Uys’ watch. The number of broadband customers grew from 720,000 to 12.2 million.
Additionally, it is well-known that Uys is respected and liked by Vodacom’s staff, which further pointed to a leader which should enjoy an extended stay at the company.
Behind Uys’ departure
With such an exceptional financial performance from Vodacom, one would expect the major shareholder (Vodafone) to beg the CEO to stay at the company for as long as these results continue. Why risk changing the leadership when the company is performing so well?
According to industry speculation, the company’s battle with AA and BEE targets in management has played a role in Uys’ departure.
It is rumoured that Vodafone, under pressure from the SA government, came down on Uys because of the company’s struggle to show a strong black management at the company.
The departure of Sipho Maseko may have added fuel to the fire. Vodacom officially stated that it was Maseko’s decision to leave the company to pursue other interests, but because of his “with immediate effect” resignation, many people speculated that he was fired because of non-performance.
Uys’ dedication to do the best he could for Vodacom, and not stand for second best from his management team, may therefore have caused friction between him and his largest shareholder, Vodafone, because of the AA and BEE targets.
It is further rumoured that interference from Vodafone in the management of Vodacom made it difficult for Uys to execute his strategy.
Vodacom officially denied all of these rumours, and Uys said that “Vodafone is a good shareholder and parent company. They have always supported us well.”
Uys also dismissed rumours that he may join former Vodacom CEO, Alan Knott-Craig at Cell C. “No. My blood is red,” said Uys.