In March, government's Class A shareholder status in Telkom will expire and it may, therefore, want to flex its muscles one last time by appointing a permanent CEO of its choice before it loses the right to do so.
However, Telkom notes its current process of appointing a permanent group CEO at Telkom is continuing and has not been concluded.
“It is, therefore, not possible to provide a time-frame at this stage. Meanwhile, the Telkom executive leadership team continues to implement its strategic and operational initiatives successfully,” states Telkom.
Hedberg previously stated he is in no way involved in the recruitment process for a permanent CEO and that the matter is strictly the jurisdiction of the Telkom board.
Nonetheless, analysts agree with speculation that a permanent CEO will be announced before government's special share expires.
Government currently has a 39.8% shareholding in the fixed-line incumbent. Its Class A shareholding status gives it special privileges over other shareholders, including the right to appoint five out of 12 directors to the board. These include the chairman of the board.
While only the board can make the final decision on the appointment of a permanent Telkom CEO, government's influence on the Telkom board cannot be ignored.
“It would definitely make sense for a permanent candidate to be announced before government's special share expires,” notes Frost & Sullivan industry analyst Spiwe Chireka.
She adds that despite the political motives, it would be a good move for Telkom in terms of boosting investor confidence in the company's leadership.
However, it is questionable whether current acting CEO Jeffery Hedberg will be government's first choice, as analysts argue he hasn't been given enough time to prove his worth.
Hedberg unlikely
Hedberg was appointed to the acting CEO position in July last year, after the abrupt departure of then CEO Reuben September. The acting CEO has since been on a drive to turn the ailing company around by introducing a five-step strategy.
Despite Hedberg's recent successes, analysts doubt he has secured the permanent position.
Absa investment analyst Chris Gilmour argues that while the industry has been seduced by Hedberg, little is really known about the so-called turnaround specialist.
Gilmour points out that Hedberg has only been at the helm for six months and prior to that had only a short stint at Multi-Links.
He argues that, based on this timeframe, it can't be guaranteed that Hedberg is the man for the job.
Add to that, argues Gilmour, government will likely seek a candidate in terms of its affirmative action agenda, which will count against Hedberg.
Ovum senior analyst Richard Hurst concurs, and argues that government may vote with its heart instead of its head. Hurst maintains Hedberg may be the right man for Telkom, but may not necessarily fit the profile for government's agenda.
However, Telkom previously hit back at suggestions that it was under government's thumb, arguing that its board acts in the interest of all its shareholders, not only government.
No interference
Last year, Telkom chairman Jeff Molobela noted that although government has special rights, including the ability to appoint five out of 12 directors to the board, it was up to the board to act in the best interest of all of its shareholders.
Thus, the candidate for Telkom's permanent CEO position will first be decided by the board, and only thereafter will government, as well as other shareholders, have an opportunity to approve the candidate, explained Molobela.
He reiterated that government, like any shareholder, has the right to make recommendations for the next CEO, but the board and board processes will ensure the final decision is best suited for all shareholders.
“So the board will not simply rubber-stamp government's wishes,” concluded Molobela.
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