Asha Speckman and Donwald Pressly
TELKOM’s new chairman, Jabu Mabuza, was a capable leader and was “very much his own man” who could stand up to Telkom’s major shareholder, the government, analysts said following the announcement of his appointment on Friday.
But just as the telecoms provider was ushering in its new chairman, the Public Investment Corporation (PIC), Telkom’s second-largest shareholder, called for a change in the manner in which the firm was managed, following a steep drop in profit and share price.
Elias Masilela, the chief executive of the PIC – the government’s pension fund manager which handles about R1.3 trillion of assets – told the Cape Town Press Club the PIC was “concerned” about Telkom’s performance. The government owns a 39.8 percent stake and the PIC holds 10 percent.
“I guess that there is a simple answer to Telkom. As the PIC we make sure that we steer clear of political sentiment. The PIC was, instead, driven by economic fundamentals.”
He noted that the PIC would like the governance of the enterprise to change.
“It is not about changing attitudes and the approach to investment going forward, [but about] making sure that in the long term this entity delivers for the country… not only for the share price but also about how we increase technological penetration to the far-flung corners of the country.”
Today Telkom will present its financial results for the six months to September following a trading advisory last week that said profit fell by as much as 83 percent for the period.
Mabuza’s trapeze act as new chairman will not only involve steering Telkom’s strategy, but also the balancing of agendas of all the company’s shareholders, according to David Couldridge of Element Investment Managers, which holds a minority stake in Telkom.
Mabuza said: “I am very humbled, privileged and honoured to serve our nation. It’s no small task, I know. That being said, someone has to do it.”
He declined to comment on his priorities as chairman.
“Having just joined the board, I will need to familiarise myself with this very big and critical national asset. I’m afraid, it’s not appropriate for me at this point to make any public announcement about Telkom, pending its release of interim results.”
The investment community has expressed displeasure at the government’s actions after it aborted a deal that attracted international investment and skills from South Korea, via a 20 percent equity sale of Telkom. To fuel growing disdain for the state’s involvement, last month at Telkom’s annual general meeting, the government re-instituted two directors that institutional investors wanted to vote off, and it removed independent directors.
The state intends for Telkom to play a developmental role in rolling out broadband over the next few years.
Telkom lost chairman Lazarus Zim and chief executive Nombulelo Moholi within two months, while an exodus of senior personnel was expected to continue as Telkom’s future remained unclear. This while the cabinet delays pronouncing the way forward.
“So long as there’s a sound strategy that takes into account the long-term interests of all stakeholders, then there’s hope,” Couldridge said.
Chris Gilmour, an investment analyst at Absa Investments, said: “Jabu is very much his own man. He will have gone in there having done his homework. If he finds he can’t add value, he’ll be off. He’s a smart operator. He’s obviously talked to government.”
Gilmour described Mabuza as a hard worker with a wide network of business contacts and “a real feel for business”, following years of experience at SABMiller and Tsogo Sun.
Over the past four months, Mabuza has been president of Business Unity South Africa, which has been characterised by infighting.
Khulekani Dlamini, the head of research at Afena Capital, described Mabuza as “one of those entrepreneurial far-sighted chairmans”.
But Dlamini joked that it was impossible for anybody to stand up to the major shareholder of any firm in any country.
Leslie Maasdorp, the president for southern Africa at Bank of America Merrill Lynch, joined Telkom’s board as a non-executive director on Friday. He has served on several boards including that of Absa and Johnnic. He recently left Cell C’s board, where he was an independent non-executive director for four years.
Masilela warned against “talking down an asset in public” as this could do more damage to Telkom. He preferred to deal with differences with Telkom behind closed doors, noting that Telkom was “a huge stock” that was “malperforming”. “It is very important that our intervention is value preserving or value growing.”
Pressed to comment on alleged political interference from the communications ministry, Masilela said: “Your question is basically saying I should judge my principal. I chose not to judge my principal [the government]. This is not because they are my principal… our approach is a philosophy that we have adopted… we will drag people screaming and shouting behind closed doors.”