Submarine cable torpedoes Molotsane

It is unusual for the CEO of a dual-listed R45 billion telecommunications group to resign with immediate effect.

No carefully staged succession or easing out of his position - so no matter how one looks at it, Papi Molotsane was fired as Telkom CEO.

Molotsane's tenure at Telkom's helm was always going to be difficult. Assuming the position in September 2005, he immediately had to cope with the residue of the exit of the Thintana shareholders consisting of SBC (now AT&T) and Malaysian Telecom.

He had to fill the shoes of a charismatic CEO, Sizwe Nkosana; deal with the internal and external political factors affecting the group; and formulate a strategy to rejuvenate a lumbering giant.

Criticised for being an industry outsider (many forget that so was his predecessor) and for not having extensive business experience, Molotsane had to also immediately deal with a revolt by senior executives over the management reshuffle he implemented.

Furthermore, he took over a company that South Africans love to hate, because time and again, reports were delivered showing the country's people were paying too much for their connectivity. Telkom's entrenched market position meant it was going to bear the brunt of the blame for all the ICT woes, even if many were not of its own making.

He took over a company that South Africans love to hate.

Paul Vecchiatto, Cape Town correspondent

What Molotsane had going for him was his naturally affable nature and a quick and intelligent mind.

However, nice guys don't easily survive the murky world where business, telecommunications and politics meet. This is a world of hard compromise, as the political goals of its major shareholder, government, have to be balanced with the overall shareholder aims of delivering profits at the least possible cost.

Last year, Telkom announced its new strategy that would focus on customer centricity (improving customer service) and, most importantly, its R30 billion capex plan to develop a next-generation network that would modernise its aging core infrastructure.

Instead of applauding Telkom, market commentators criticised it for the continued high connection fees and its mudding of the waters by refusing to distinguish between its wholesale and retail divisions. The news that the board was considering a proposal to split these divisions came at a stage when it was too little and too late to save the day.

During the past six months, more and more commentary was published regarding Molotsane's lack of vision and his poor running of Telkom. The end was in sight when president Thabo Mbeki stated, in this year's State of the Nation address, that government was discussing with Telkom ways to bring down prices for certain "developmental call centres", as the cost of telecoms was hampering their development.

Two weeks ago, Department of Communications director-general Lyndall Shope-Mafole slammed Telkom for signing the East African Submarine Cable System supplier contract on 9 March, because it was outside the "policy framework".

The signing of this contract left government with egg on its face as it potentially jeopardised its diplomatic initiative to create a Nepad Broadband Infrastructure Network. This project has had a troubled gestation period. It is also under threat of being supplanted by the World Bank's own sub-Saharan Regional Connectivity Infrastructure Programme, which has funding to the tune of $424 million.

Almost simultaneously to Shope-Mafole's lashing, Mbeki delivered the coup de gr^ace by criticising Telkom in the foreign press for its lack of planning capacity.

In the corporate world, if a CEO loses the confidence of his board or the major shareholder, then he must go. Whether it is a resignation, or an outright firing, makes little real difference.

Government may one day rue the fact that it meddled so much in Telkom's affairs. The fact that it is setting up another broadband supplier, Infraco, could mean the country gets saddled with two lumbering giants, rather than the more nimble market players that are able to adapt quickly to changing market conditions.