Telkom CEO quits amid investor, govt criticism

JOHANNESBURG – The chief executive of South Africa’s fixed-line phone firm Telkom has quit after 18 months in the job and a chorus of criticism from shareholders and the government, boosting the company’s shares.

Telkom, which came under fire this week from President Thabo Mbeki for “profiteering”, said in a statement that Papi Molotsane had quit with immediate effect and would be replaced temporarily by Chief Operating Officer Reuben September. Telkom did not say why Molotsane, who shareholders say has failed to craft a clear vision for the company, had left the former monopoly.It said it would start looking for a permanent replacement.The stock has underperformed South African blue-chips sharply since he took the job.One analyst said he feared Molotsane may have been pushed out by the government, which says Telkom’s high tariffs are inflating the cost of doing business in Africa’s biggest economy and impeding the rollout of communications to the poor.”Many people in the investment community feel Telkom could do a lot better than Papi, and if they could find someone with a convincing vision for the organisation that will be a catalyst for the stock,” a Johannesburg-based analyst said.Shares in Telkom jumped after the surprise announcement, which came minutes before the market closed for a long Easter holiday weekend.The stock closed 2,4 per cent higher at 171 rand.Molotsane took the helm at Telkom in August 2005 with no experience in telecoms and a mandate to safeguard profits despite tough competition in Africa’s biggest economy, both from mobile firms and a new fixed-line operator.The former executive at state-owned transport firm Transnet has presided over a 34 per cent rise in the share price since taking over as CEO until Wednesday’s close, but the Johannesburg Top-40 index of blue-chip stocks has leapt 76 per cent in that time.Molotsane says he is a bridge-builder who has smoothed prickly relations with Telkom’s mobile unit Vodacom and crafted a new vision for the former monopoly by vowing to muscle into IT services and expand in Africa.Investors are not sure after a string of costly errors in December last year, including acquisitions that fell through and the failure to make a provision for a lawsuit.Mbeki weighed in with criticism of the company last week, lashing out at Telkom in an interview with the Financial Times over tariffs that consumer groups say rank among the highest in the world.Nampa-ReutersTelkom did not say why Molotsane, who shareholders say has failed to craft a clear vision for the company, had left the former monopoly.It said it would start looking for a permanent replacement.The stock has underperformed South African blue-chips sharply since he took the job.One analyst said he feared Molotsane may have been pushed out by the government, which says Telkom’s high tariffs are inflating the cost of doing business in Africa’s biggest economy and impeding the rollout of communications to the poor.”Many people in the investment community feel Telkom could do a lot better than Papi, and if they could find someone with a convincing vision for the organisation that will be a catalyst for the stock,” a Johannesburg-based analyst said.Shares in Telkom jumped after the surprise announcement, which came minutes before the market closed for a long Easter holiday weekend.The stock closed 2,4 per cent higher at 171 rand.Molotsane took the helm at Telkom in August 2005 with no experience in telecoms and a mandate to safeguard profits despite tough competition in Africa’s biggest economy, both from mobile firms and a new fixed-line operator.The former executive at state-owned transport firm Transnet has presided over a 34 per cent rise in the share price since taking over as CEO until Wednesday’s close, but the Johannesburg Top-40 index of blue-chip stocks has leapt 76 per cent in that time.Molotsane says he is a bridge-builder who has smoothed prickly relations with Telkom’s mobile unit Vodacom and crafted a new vision for the former monopoly by vowing to muscle into IT services and expand in Africa.Investors are not sure after a string of costly errors in December last year, including acquisitions that fell through and the failure to make a provision for a lawsuit.Mbeki weighed in with criticism of the company last week, lashing out at Telkom in an interview with the Financial Times over tariffs that consumer groups say rank among the highest in the world.Nampa-Reuters