In reaction to shareholders in the run-up to the meeting, the board reduced the cap on the number of shares that may be repurchased in a financial year from 20% to 10% of issued shares, changed the rules on who may benefit from financial assistance from Telkom, and cut shares available for an employee share ownership scheme from 10% to 5% of issued capital.
It also withdrew its recommendation for the re-election of Molobela, who initially decided to make himself available for re-election anyway, but withdrew late on Thursday (26 September).
Molobela cut a lonely figure at the meeting, with all board members appearing unwilling to sit next to him. Only one did, and even she moved one seat away as the meeting wore on.
In an open letter to shareholders distributed at the meeting, Molobela said he "speculates" that the board does not support him because of his strong objection to a couple of decisions that were not in the interest of Telkom, nor the shareholders.
"Sadly, due to the position of confidentiality that the act requires me to conduct myself, I cannot give details on these matters. However, I strongly believe that I was acting in the best interest of the company," he said.
Molobela, who served as a government representative on the board, was largely blamed for the exit of former chief executive Reuben September and former chief financial officer Peter Nelson in 2010. He was accused of interfering in the day-to-day running of the business and was described as being "a divisive force".
A KPMG probe at the time cleared him of wrongdoing but he was also blamed for delaying Telkom's exit from Multi-Links in Nigeria, where the company lost at least R10bn.
Chief executive Sipho Maseko dismissed Molobela's concerns as a "sideshow" that should not detract from Telkom's turnaround strategy, which is set for finalisation in November.
Maseko plans to stop the bleeding of cash from Telkom's mobile business, which lost R1.7bn in the past financial year.
Chairman Jabu Mabuza said the last-minute changes, published on Thursday (26 September) were made to ensure greater alignment between shareholders, the board and management, indicating that the board had tried to avoid a repeat of last year's spectacle.
Dina Pule, who has since been sacked as communications minister, caused a stir at last year's meeting by unexpectedly withdrawing government's proxy vote, opting to vote against the appointment of four non-executive directors.
Her replacement, Yunus Carrim, was all smiles and handshakes at the Friday meeting (27 September), suggesting the often frosty relations between the department and Telkom's head office may be thawing.
Last year Pule also stopped the board's proposed sale of 20% to South Korea's KT Corp, further alienating investors and contributing to the slide in Telkom's share price to its lowest in a decade. Telkom has since appointed heavyweights to its board, including Leslie Maasdorp, president for Southern Africa at Bank of America Merrill Lynch, former Absa deputy chief executive Louis von Zeuner and former MTN and Absa executive Santie Botha.
Mabuza said the company's main shareholders, including the government, the Public Investment Corporation and Allan Gray, its board and management are all facing in the same direction.
Since Maseko took over six months ago, the share price has jumped 62%. Not all shareholders are convinced by Mabuza and Maseko's confident talk, however.
Mehluli Mncube, a representative of the Eskom pension fund, raised questions about Telkom's remuneration policies: "If you look at the performance of the company, it doesn't look as good as the pay of its executives."
Mncube described Telkom as a taxi whose passengers were not sure if the wheels or door might fall off, given the number of changes at board and executive level in recent years. He said afterwards he was hopeful that the new board will be granted sufficient time to bed down some of the proposed changes.
Maseko is Telkom's fifth chief executive in six years, and Mabuza its fourth chairman in five years. Mabuza, who started his career as an East Rand taxi driver, said: "Telkom's board and management are all facing in the same direction, and, pray God, the environment will also be conducive to us."
Maseko said Telkom would fight local-loop unbundling, as it will give other telecoms companies access to the part of the network that links customers to their nearest exchange. "This would give competitors a free ride on investments made by Telkom," said Maseko. However, critics say Telkom should open up this part of the network as it was built using taxpayers' money when Telkom was a monopoly.
Source: The Times via I-Net Bridge
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