Hedberg's resignation shocks

By Candice Jones, ITWeb online telecoms editor

Johannesburg, 25 Mar 2009

The resignation of Cell C CEO Jeffery Hedberg, known as a turnaround specialist, has come as a surprise to the industry.

Cell C released a statement last night announcing the immediate resignation of Hedberg, who has spent the last three years trying to turn Cell C into a profitable business. According to the statement, Hedberg will be replaced by German-born telecoms veteran Lars Reichelt.

Recent media speculation had Hedberg pegged for the top spot at Telkom, to replace the increasingly unpopular Reuben September. However, a Cell C spokesperson has confirmed Hedberg is not headed for Telkom.

Analysts are baffled by the sudden move. Less than a week ago, the company confirmed Hedberg's contract only expires in November and other media reports indicated he intended to work out the contract until then.

Since he took over at Cell C in May 2006, Hedberg has been instrumental in the turnaround of SA's third mobile operator. He inherited an almost impossible task, given the company's large-scale debt, which includes billions in foreign currency financing and interest.

Richard Hurst, programme manager for communications for Africa at IDC, says the industry had expected him to stick around at Cell C to see the fruits of his labour. “He has been working on righting the ship since he came on board, and now that it is returning to the right track, we would have expected to see him stay on to see it happen.”

Denis Smit, MD of research firm BMI-TechKnowledge, is also baffled by the move. “He was doing an excellent job at Cell C. It seems to have come on really quickly.”

Hedberg's abrupt move has fuelled speculation on where he might be going. Cell C's statement notes he will stay on as Virgin Mobile SA's (VMSA's) chairman, but does not indicate what his full-time job will be.

“I will work closely with the VMSA management team during its re-positioning. I am also currently considering new and challenging roles, within and outside of the Oger Group, and look forward to building on the success that I had in SA,” says Hedberg.

The Oger Group has an array of opportunities available to Hedberg, including Turk Telecom, which Hurst says has been a strong business for Oger. Through its ownership in Turk, Hedberg will have access to at least seven other business opportunities.

Oger also has a majority stake in an Internet business called Cyberia, which could prove a new challenge for Hedberg in the coming year. There are also possible opportunities at Saudi Telecom, the joint owner of Oger.

Some speculation has surfaced indicating there might be a small shuffle, with Hedberg to head Virgin Mobile SA, which is in need of a turnaround strategy. Virgin, a 50% venture between Virgin Mobile and Cell C, has yet to claim 1% of the local mobile market.

Hurst is not surprised to note the appointment of another foreigner at Cell C and Reichelt comes with an impressive history in telecoms. He has headed telcos such as Banglalink, Orascom's venture in Dhaka, T'el'efonica 3G, in Zurich, Switzerland, and ONE in Vienna, Austria.