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Telkom's biggest problem

The board can't seem to settle down with a leader - is it because they don't toe the government line?

Read time 4min 20sec

Telkom has had a rather muddied reputation for as long as I can remember. Internet complaint sites are littered with notes on the company's bad service delivery, and many bemoan the cost of its products. Being a government cash cow for many years has done nothing to engender joyful feelings around the telco.

The last few months have seen several controversial media articles about the company's leadership. More specifically, Telkom CEO Reuben September's ethical management of the business is being questioned.

The entire saga interested me, and I set out to research the business with a view to gain a perspective on September's business practices. My research turned up more interesting ideas than I had expected.

There is far more to the Telkom claims than speculated corruption and assumed bad leadership. Most of Telkom's woes can be traced directly back to the actions of its board of directors.

In and out

There is every indication that Telkom is trying to turn itself around and is being held back by many more obstacles than any other telecoms company in this country.

How can any man be an effective leader with board criticism looming over his head?

Candice Jones, Telecoms editor

While many people complain and speculate over the calibre of the company's leadership, it has, by the same token, not been given the chance to change. Take a look at the list of CEOs it has been through over the years.

The longest-standing appointment since 1998 was Sizwe Nxasana, who managed to hold onto the position until 2005. Nxasana had the golden years of Telkom, with no real competition, since the mobile providers had only just started to thrive.

Since then, the company has been pounded between the waves of management uncertainty. After Nxasana, the company appointed former Transnet group executive Papi Molotsane, who was summarily booted by the board not even 18 months later.

There was speculation that both CEOs did not toe the government line and, with six of 10 board members government representatives, it's no surprise they were booted. Next in line was Reuben September.

Uncertainty rules

September has held the position of CEO for well on two years now and there are contradictory ideas on the man's leadership skills.

What we do know is that September seems to be the only CEO since before Nxasana who has had any experience in the telecoms industry, having worked his way up the ranks at Telkom. While employees seem to find him unsatisfactory, most media reports seem to indicate he is trying to do a good job.

But honestly, how can any business thrive when employees are uncertain who their next leader will be? More importantly, how can any man be an effective leader with board criticism looming over his head?

Latest media reports indicate the board is unhappy with the job that September has done recently. Several financial-level transactions have indicated the man may well be on his way out; the axing of chief of operations, Motlatsi Nzeku, and a share offer to September of R8 million not being the least of them.

End of September?

Although, looking at September's track record over the last couple of years has me wondering why. Certainly, his plans for the company have not met with union approval, but it certainly is in line with global telecoms best practice.

The first of September's approved turnaround strategies is the “capability management” idea, which will see the company's cumbersome operations impressively streamlined. It is expected to outsource roughly 90% of its business, culling all unnecessary operations and handing over staff to other companies.

This strategy has been completed the world over by other large telecoms companies, and has proved extremely successful. What many of the global giants didn't do was try to ensure staff employment at the outsourcing companies, whereas Telkom is.

Needless to say, the unions have managed to halt the process, although all indications show Telkom will restart it soon. Many local analysts say this will be Telkom's best move to gain a competitive spirit.

Secondly, Telkom's decision to sell Vodacom could not have come at a better time for the company. And while we speculated on its future, Telkom has been busy preparing for its own mobile strategy, and growing its African business.

Its management shuffle will follow its capability management, creating a more streamlined management methodology that will hold leaders accountable at Telkom. Its focus on diversifying its product set could be its saving grace.

So where has September gone wrong? There is no real way to know what the board's agenda is, although there is no doubt there is one. It appears it's not weak leadership, but a weak board that is holding back the company.

Ultimately - what is in the best interest of the country's telecoms industry is to let Telkom get on with it - it seems to be on the right track.

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