Telkom is eating itself
[By Lloyd Gedye]
Last Thursday, 13 January, at 5pm a man was driving near the town of Phokeng, the capital of the Royal Bafokeng Nation, which lies near Rustenberg.
He spotted a Telkom bakkie on the side of the road and a man in a Telkom uniform hacksawing a copper cable.
The concerned citizen was suspicious because the area had been hit by “massive” amounts of cable theft, so he pulled off the road and sat and watched the Telkom employee at work.
The Telkom employee attached the sawn off end to the back of the bakkie and towed it for about 1,5km to 2km, dragging the copper cable from under the ground.
Then he stopped the bakkie and returned to saw off the other exposed end of the cable, which he cut into smaller pieces and loaded into the Telkom bakkie.
The observer was convinced that the Telkom employee was stealing copper cables from his own employer and called the police, who promptly pounced on the suspect and arrested him.
Whether the employee was acting alone or is part of a wider syndicate within Telkom stealing copper cables remains unknown.
On the same day as the arrest it was reported that Telkom’s acting CEO, Jeffrey Hedberg, the man many had hoped would turn the ailing national fixed-line operator around, had resigned and would leave the company in early March.
Hedberg acquired a reputation in the SA telecoms sector as a turnaround expert after he was credited with saving struggling mobile operator Cell C.
Anyone who was surprised by Hedberg’s decision has obviously not been paying close attention to recent developments at Telkom.
In fact the decision to leave is probably one of the smartest of Hedberg’s career. The fixed-line operator has been rudderless for many years, lacking any clear direction or concrete leadership, Hedberg’s brief tenure excluded.
The market has no confidence in Telkom senior management’s ability to turn the sinking ship around, a point that is made clear by the fact that the company’s share price is trading at a discount of 36% to its net asset value.
In layman’s terms this means that it would be more profitable for shareholders to sell off all of Telkom’s assets than for the company to continue running.
Recent dossiers sent to the Telkom board by members of the company’s unions have painted a picture of an organisation rife with corruption and fraud, riddled with conflicting interests and intent on covering up controversy rather than eliminating it. Many had hoped that Hedberg would be the new broom to sweep Telkom clean.
However, numerous sources have told the Mail & Guardian about a culture of senior managers collecting evidence and dirt on one another to hold guns to their colleague’s heads, not to clean out the rot but to secure their own position in the hierarchy.
If you have enough dirt on your superiors they are unlikely to act against you, no matter what dirty dealings you get up to yourself.
With a senior management team that is more preoccupied with protecting its own interests and future than with turning the ailing fixed-line operator around, is it any surprise that on the same day the story broke about Hedberg’s resignation a Telkom employee was caught stealing copper cables?
Telkom is eating itself from within and the company appears to be the walking dead. Urgent action is required, but the government has other intentions.
With Hedberg making himself unavailable for the top job and chairperson Jeff Molobela also soon to depart, the consensus is that government will take the opportunity to make sure that its own man is put in place as chair.
Speculation has linked mining magnate Lazarus Zim to the position. The government has a so-called golden share in Telkom, which comes with its 39,8% shareholding.
It allows it to appoint five out of 12 directors to the Telkom board, including the chairperson. This will give it significant power to ensure that the new CEO will also likely be its preferred choice.
The “golden share” is set to expire in a few months, but new communications minister Roy Padayachie was reported late last year saying that the government did not want to give up the control it exercises over Telkom.
Whether or not there is a move to try to renew the “golden share” agreement one thing is for sure, government will not leave anything to chance and the vacant positions of chairperson and CEO will be filled with approved candidates.
The only problem is that placing political considerations before economic ones may just be the death blow that will put Telkom out of its misery.
- Lloyd Gedye is a senior business journalist at the Mail & Guardian
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