Hedberg's move fuels speculation

Confirmation of his pending resignation fuels already rampant speculation that Telkom is out to recruit Hedberg to replace its own CEO Reuben September. As well as benefiting from Hedberg's global experience gained from working with Deutsche Telecom and T-Systems, Telkom shareholders are understood to be making overtures with the goal of having him drive an acquisition of Cell C.

However, Hedberg may also be making himself available with an eye to joining Zain, the Kuwait based operator that has frequently stated its intention to enter SA.

Hedberg is declining to clarify his future career path, possibly because he is considering rival offers with vastly different prospects. Joining Telkom would give him a great opportunity for revitalising the operator and fulfilling its ambitious strategy of offering a blend of voice and data services across the continent. But the downside is that he would be highly answerable to its 39,4% shareholder the government, which is known for bungling rather than advancing SA's telecoms sector.

That may make a career with Zain far more appealing, as the cash-flush operator is making strong strides across Africa and the Middle East and aims to be a top 10 global mobile telecoms player by 2011.

Analysts at Delta Partners see value in a potential acquisition of Cell C by Telkom, since Telkom needs Cell C's mobile experience. Telkom could also cross-sell its broadband products to Cell C's 7,4-million subscribers.

With or without a change in shareholders, Cell C may decide it is time for an aggressive push into the market, vying for the last 10% of South Africans who do not use a cellphone and working to lure users from the other networks.

That would require extensive rural coverage, and given its current financial results and billions of rands in debts, it would be difficult to fund such an intensive investment, Delta Partners says.

Its majority shareholder, Saudi Oger, may also be relieved to disinvest, since Cell C is still a long way off turning a net profit.

Source: Business Day

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