Drama plagues Telkom AGM

2013-09-29 10:00

Telkom cannot seem to escape its shareholders’ annual general meeting (AGM) without a scandal these days.

Last year, former communications minister Dina Pule arrived and wanted to vote, despite a proxy having been sent a few days before the meeting.

The minister then proceeded to oust several board members.

Government is the biggest shareholder, with a direct 39% interest, and a 10.6% indirect interest through the Public Investment Corporation.

On Friday, board member Jeff Molobela handed out a letter to shareholders shortly before the start of the AGM announcing he no longer wants to be part of the Telkom board.

In the letter, Molobela not only withdrew his nomination for directorship, but also accused the board of “dysfunction” for sending out communication to shareholders that though he is eligible for re-election, the board does not support that move.

He notes in the letter that he was not presented with cogent, verifiable reasons for the decision not to support his re-election.

“In taking the unusual step of stating that they do not support my re-election, they have created an element of innuendo and this demonstrates that they have not been comprehensive in considering the implications of their decision,” the letter states.

Sipho Maseko, the Telkom Group chief executive, called the move a “bit of a sideshow”.

He said he didn’t see the matter as a dispute.

In the letter, Molobela states that the board may have acted this way due to his strong objection to a couple of decisions the board has taken that he feels were not in the interest of the group, or its shareholders.

“Sadly, due to the position of confidentiality that the act requires me to conduct myself, I cannot give details on these matters,” he said.

Maseko inherited a Telkom that is riddled with challenges, including its mobile unit, 8ta, which has been bleeding millions as it struggles to gain market share and contain costs.

From April until August, the group has been going through a voluntary retrenchment process and Maseko said on Friday that about 1?800 employees had taken the voluntary severance packages.

He said there was no target set for the voluntary severance package programme. In its annual report to March 31 2013, Telkom reported that it had 22?192 employees. Employee expenses are by far its biggest expense – totalling R9.86?billion in the 2013 financial year.

Nonexecutive directors have also decided not to take a pay increase this year, in support of containing costs.

Chairperson Jabu Mabuza draws a yearly salary of R1.1?million.

Maseko and the board could still give no direction on the future of 8ta, which only has about 1.5?million subscribers, but Maseko said stemming losses was the first phase of turning it around.

He said: “One has to de-risk mobile and to me it means that the intensity of what it costs us needs to be reduced.”

How the group plans to reduce the cost is unclear and Mabuza said more on their strategy would be announced in November.

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