Telkom's September makes an early exit

Telkom investors applauded the surprising news on Friday that chief executive Reuben September would be leaving four months ahead of schedule, while former Cell C boss Jeffrey Hedberg has been given his job - for now.

Telkom initially said September would leave when his contract expired in November. But the leak of his resignation letter - in which he accused chairman Jeff Molobela of breaking governance rules and creating a "suboptimal" board of directors - made it unlikely that he would see out the contract.

On Friday, Telkom said September had "agreed with the Telkom board to step down" from Wednesday, and US national Hedberg was appointed acting CEO.

However, reliable Telkom insiders have confirmed that September "asked the board" as long ago as the first week of June if he could leave at the end of that month - and not at the end of November as the company initially said.

"At the time when the board informed Reuben that his contract would not be renewed (in June), he asked to leave at the end of June," said one executive.

This explains why, at Telkom's results presentation two weeks ago, September was a fringe figure and prevented from conducting media interviews.

Shareholders were not shedding tears for September this week.

Asset manager Stanlib owns 5% of Telkom, and analyst Fred Teeling-Smith said Hedberg's elevation was positive. "Hopefully, Jeffrey will be able to provide some stability. His background (with Cell C) will hopefully provide some clarity on Telkom's mobile strategy," he said.

Telkom's much-hyped mobile arm is due to open doors later this year, and the company is talking boldly of owning 10% of the cellular market within five years.

Frost & Sullivan analyst Spiwe Chireka said Hedberg's appointment as acting CEO made him a front-runner for the job in a permanent capacity.

"Telkom needs a turnaround CEO, and given what he did at CellC, this puts him as the best candidate. He's been there a year, and so he now knows the company."

Chireka said it made sense for September and Telkom to call it quits. "He's a CEO on the way out, and Telkom needs to hit the ground running, like, yesterday."

While Hedberg was renowned for reinvigorating Cell C, he has not been able to perform the same magic on Telkom's flailing Nigerian arm, Multi-Links, which he has headed since last year.

For the year to March, Telkom was forced to impair the value of Multi-Links by R5.2-billion to zero - an embarrassing reversal after it spent R3-billion buying the company in 2007. Multi-Links was the main culprit behind Telkom's 92% plunge in earnings from continuing operations.

"He went to Multi-Links to sort that out, and it became more of a problem. But that was probably due to factors beyond his control," said Teeling-Smith.

While Hedberg and Pinky Moholi were seen as front-runners for the CEO post, shareholders like Stanlib have insisted that Telkom broaden the search.

"Telkom has asked shareholders for our views, and we said we'd like to see someone coming from the industry, and fresh blood is probably better.

''Having said that, someone like Hedberg is still relatively new to Telkom," said Teeling-Smith.

Rumoured candidates include former MTN SA boss Maanda Manyatshe, ex-Vodacom SA managing director Andrew Mthembu, ex-SABC boss Dali Mpofu and Alan Knott-Craig, who was Vodacom's CEO until 2009.

But, as government is a 39% shareholder in Telkom, there is a risk that a permanent position could be a political appointment.