Neotel CEO and MD Ajay Pandey is to leave the local telecoms operator, and probably the country, when his five-year contract expires in March.
This is according to sources within the company and close to its board, who say a successor has already been identified.
The embattled telecoms operator is undergoing a realignment process as a result of its continued dismal performance.
Its latest annual report, for the year ended 31 March 2010, reveals its independent auditor Deloitte & Touche has serious misgivings about the local operations.
“The company's recurring losses from operations and shareholders' deficit raise substantial doubt about its ability to continue as a going concern,” says partner Andre Dennis in the report.
The 2010 financial year saw the company deliver a R1.1 billion loss. This was a 50% increase on its R739 million loss in 2009, which in itself was a 130% increase on its 2008 loss of R320 million.
What's more, the company has yet to near its 2006 stated target of capturing 15% of Telkom's client base within five years. Last year, Pandey revealed the company expected to have around 50 000 subscribers at the cut-off of its 2011 financial year. This is 1.25% of Telkom's four million subscribers.
In early January, it confirmed it may retrench staff as the company is not performing in line with expectations. Neotel said staff consultation will start in mid-January, and some jobs will be made redundant.
Solidarity and the Communication Workers Union later declared they would fight tooth and nail to protect members from the proposed retrenchments.
Time to go
Neotel's board, as well as majority shareholders Tata Communications and Tata Africa, have placed the blame for the ongoing lacklustre performance on the management team, more specifically Pandey, say insiders.
“The board has been dying to replace Pandey, but opted for a quiet 'contract completion' exit in light of his history with the company,” says one source.
network operator. Tata Communications' ex-CEO and standing Neotel board member Narasimhan Srinath was understood to have “respectfully taken this history into account” when working with Pandey.
However, Tata Communications' newly-announced CEO and MD, Vinod Kumar, is unlikely to use kid gloves.
“Srinath is a patient man who always took the time to understand the situation from the people on the ground. Kumar is a balls-to-the-wall operator; he issues targets and expects results. There is no time for excuses and understanding,” another source says.
Neotel's dramatic losses are sure to feature among Kumar's top priorities, as he leads the operator out of the worldwide financial crisis.
Indeed, Pandey's replacement, soon to make the transfer from the company's Indian operations, will be under pressure to deliver a quick turnaround.
Pandey, Neotel and Tata Africa declined to comment.
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