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Cell C hopes American boss will take it to the next level

Published May 17, 2006


The appointment by Cell C of a manager with international experience in the telecommunications industry marks a new phase in the life of South Africa's smallest and youngest cellular operator.

Cell C's move is not without precedent. MTN pulled off a similar trick in October 1995 when it replaced chief executive John Beck with American Bob Chaphe.

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Cell C said yesterday that it had appointed American executive Jeffrey Hedberg to take over as chief executive from Talaat Laham, who will remain on the board as non-executive chairman.

Hedberg is the former chairman and chief executive of Deutsche Telekom US. Before that, he was the executive vice-president in charge of international operations at Deutsche Telekom, one of the world's biggest telecoms companies.

Laham said Hedberg's mandate was "to further develop Cell C into an even more significant challenger than it has already become". His immediate tasks are to grow Cell C's share of the market and improve its profitability.

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Since its launch as South Africa's third cellular operator in 2001, Cell C has signed up almost 3 million subscribers, giving it a 10 percent share of the local cellular market. It still significantly lags local market leaders MTN and Vodacom, which have branched out to other countries in Africa and, in MTN's case, the Middle East.

It's a moot point whether having a foreign chief executive will help.

Chaphe was appointed to run MTN after an agreement was struck with other shareholders that gave US firm SBC the right to appoint MTN's boss after SBC took a stake in M-Cell, the then-holding company.

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Chaphe brought a different touch to MTN. Among his more public actions, he put a stop to the spat between MTN and Vodacom over advertising slogans after the ad wars had been extended to the courts.

He remained at MTN even after SBC had sold its 15.5 percent stake. He left in January 2002 and was replaced by Paul Edwards, who was replaced less than a year later by Phuthuma Nhleko.

In addition to driving MTN's growth in South Africa, Chaphe led MTN on its first forays into the rest of Africa. He was obviously a great asset to MTN, which has pursued growth through expansion outside South Africa with great success.

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At Cell C Hedberg has his work cut out for him. He will have to lead the firm in a battle for market share against two very well entrenched competitors.

The question is, will he be able to devise a strategy that grows Cell C's share of the market at the same time as it delivers profits for shareholders? Time will tell.

DATATEC The long-awaited black economic empowerment (BEE) deal by this JSE-listed information technology (IT) company could be announced as early as next month.

The deal, which was supposed to have been announced early this year, was delayed because the empowerment group had to sort out its minority shareholder issues.

Word in the market is that Datatec has been negotiating with African Legend, which also has IT interests. African Legend is headed by Mashudu Ramano.

Datatec chief executive Jens Montanana would neither confirm nor deny that his company was talking to African Legend. "The group was in negotiations with a group of companies," he said.

Last year he said that Datatec was in talks with an existing IT services group and that Datatec and its BEE partners would form a subsidiary to act as the holding company for Datatec's local businesses and those of the new merged entity.

Yesterday he said the BEE partnership would help the company expand its tentacles into the technology solutions space. The local operations, Westcon AME and RangeGate, participate in the value-added network equipment services and wireless technology business market, respectively.

Is Ramano the man to help Datatec's foray into the technology solutions space? He was not available for comment, but watch this space.

SABMILLER This brewer's results for the 12 months to March are due out tomorrow, which means that we will not only see how well the group is doing with its worldwide beer sales, but also how well Coca-Cola is doing in South Africa.

Since the minority shareholders in ABI were bought out a few years ago, the only opportunity for interested parties to track the performance of Coca-Cola in the country has been through the SABMiller's consolidated figures.

It would, of course, be much nicer to have a direct view of Coca-Cola, particularly now that Pepsi has yet again relaunched itself in South Africa.

With direct access to ABI's figures it was possible to get some indication of whether Pepsi was making any headway in the overhyped "cola war" of a few years ago.

And it was fascinating to compare the substantial resources that ABI devoted to securing and growing its market share with the rather paltry investment that Pepsi made in its bid to get a toehold in the local soft drinks market.

Indeed, all in all the previous Pepsi launch seemed like a poorly considered and executed exercise, which appeared to depend heavily on whether South African consumers were overwhelmingly driven by the desire to have an alternative to Coca-Cola.

As the ABI balance sheet revealed at the time, more money was being spent on Coca-Cola's returnable bottles than was being spent on Pepsi's relaunch.

So after some initial excitement and success, Pepsi's previous re-entry into the local market was sadly aborted.

Hopefully the latest attempt will prove to be more successful. It is always a good thing for consumers to have a choice.

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