Johannesburg, 14 Jan 2011
Investors have responded negatively to news that Telkom's acting CEO, Jeffrey Hedberg, will leave the organisation at the end of March.
Telkom has yet to officially inform its shareholders of the impending exit through the mandatory Stock Exchange News Service (SENS).
Telkom shares lost 3.24% in value during the first hour of trade this morning, selling for under R36 a share. A half hour later, more than 850 000 shares had traded hands, well over the daily average of transactions since mid-December.
Although there has been market speculation for some time that Hedberg may not stay on at the partially government-owned entity, the news has still come as a knock to investors.
Ovum senior telecoms analyst Richard Hurst explains: “Hedberg is widely respected by telecoms investors. Institutional investors, in particular, are well versed with his performance at Deutsche Telekom and even Cell C, despite its results not entering the public arena.
“When it comes to Telkom though, there is an impression that investor value is secondary to the desires of its largest shareholder, government. Hedberg's decision to remove himself from the organisation places a spotlight on this view.”
Government is due to lose its special Class A shareholder status when this expires in March. This status gives it special privileges over other shareholders, including the right to appoint five out of 12 directors to the board. These include the chairman of the board.
Government's direct shareholding is just short of 40%, but exceeds the 50% mark when the Public Investment Corporation's interest is included.
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