Shares in Telkom headed towards fresh lows in mid-morning trade on the JSE, shaving off nearly 4% before paring some earlier losses. By 11.20, Telkom lost 47 cents, or 2.58%, to R17.73.
A dealer told BusinessTech: “Those investors who have been biting the bullet on Telkom will be switching to Vodacom and MTN after today’s announcement. Both MTN and Vodacom made good gains after MTN delivered sound subscriber figures last month.”
The dealer said the news of Moholi’s resignation appeared to signal the beginning of the end for Telkom as a private company.
DA shadow minister of communications, Marian Shinn told BusinessTech: “This is a tragedy for Telkom and the SA communications sector, as talented professionals are being driven out of state-controlled entities through cabinet Minister amateurism and naive ideology that has no place in a knowledge economy.”
Chireka described Moholi’s exit as unsurprising: “It does put into question the need for stable leadership at Telkom. The group has a habit of changing CEO’s recently,” she said.
The analyst stressed further that her assumptions over Moholi’s resignation were based on an inability to do her job effectively amid government’s increasing role in Telkom.
“To me, Moholi’s resignation appeared to only be a matter of time after government blocked the KT Corp deal earlier this year. Minister Pule has also taken a more active role in the leadership of Telkom which is strange, and would have presented challenges for the CEO,” Chireka said.
She said further that having power without authority, would have put “unfair pressure” on Moholi.
“It is unlikely that Telkom will fill the post quickly,” Chireka said.
Moholi’s resignation follows recent drama at an AGM late last month. Government, which has a 39.8% stake in Telkom, and led by the minister of Communication’s Dina Pule, blocked the appointments of four directors.
Pule said that government would work to ensure that the vacant board seats at the fixed-line incumbent were filled by the end of 2012.
The minister added that a “management team” was in place to speed up that process, adding that it also expected Cabinet to announce the options available “to find a lasting and sustainable solution for Telkom’s turnaround”.
“The rest of that strategy, which pertains to broadband rollout and possible partners for fixed line and mobile telephony will be spoken to by March 2013,” Pule said.
Chireka said it was time for Telkom to have an uncomfortable discussion over its future as a private company. “Is it in Telkom’s best interest to remain a private company?”
Telkom appointed Nombulelo Moholi as CEO of the group in March 2011, having served as MD of Telkom SA, responsible for wholesale and retail commercial operations, consumer products and services, and network operations.
Prior to joining Telkom, she worked for GEC and Siemens (South Africa). Moholi holds a Bachelor of Science degree in Electrical and Electronic Engineering from the University of Cape Town and has attended the Strategic Executive Programme at Stanford Business School and the Strategic Marketing Management Programme at Harvard Business School.
Moholi joined Telkom in 1994 as GM of Payphones. She also held several executive leadership positions at Telkom, including managing executive: network infrastructure provisioning, managing executive of international and special markets, and chief sales and marketing officer.
She left Telkom in 2005 and joined Nedbank, where she served as group executive of strategy, marketing and corporate affairs.
Moholi returned to Telkom in 2009 as MD of the Telkom SA business unit.
In September, Telkom advised that its headline earnings per share from continuing operations for the six months ending September 2012 are expected to be at least 65% lower than the prior comparative period.
HEPS from continuing operations for the six months ended September 2011 stood at 191.7 cents, 35.5% lower than in 2010.
Telkom advised shareholders that basic earnings per share from continuing operations for the six months ending 30 September 2012 is expected to be at least 45% lower than in 2011.