Sipho Maseko left Telkom looking a lot different from when he entered the CEO suite in 2013. He has transformed a company with a business model in irreversible decline into an emerging mobile phone network powerhouse.
During his nine years in charge, Telkom started to morph into a modern player to compete with established giants MTN and Vodacom, whose stranglehold on the market appeared unshakeable when Telkom launched its mobile phone operator in 2010.
He advanced a punishing but necessary cost-cutting plan when sound and prudent business practices were under assault from its top shareholder — the government — shrinking the company’s bloated workforce in half from 22,000 in 2013.
Other than that, Maseko, who left six months earlier than scheduled in January, can also count handing R13bn trapped in Telkom’s sprawling infrastructure as a parting gift to shareholders because plans are afoot to list its mast and towers division.
To be sure, Maseko did not exactly have a tough CEO act to follow. Telkom’s bosses failed to craft a convincing growth strategy after the departure of Sizwe Nxasana, who served for seven years until 2005.
But what matters to investors, including the government with its 40% holding, is the result of Maseko’s labour: a nearly threefold surge in their equity since he took the reins.
It looked like a glorious legacy until last week when President Cyril Ramaphosa ordered an investigation into possible corruption and malfeasance in the company’s affairs dating as far back as 2006, giving the Special Investigating Unit (SIU) wide scope to look into whether laws were violated in the company’s ill-fated cross-border forays.
The probe, which will also look at whether any laws were broken in procurement of telegraph and advisory services related to Telkom’s mobile and broadband strategy, has cast a shadow over Telkom and possibly over Maseko’s legacy.
It is safe to assume that Maseko is not entangled in the investigation that will scrutinise Telkom’s purchase of three-quarters of Multi-Links, a $500m (R7.6bn in today’s money) Nigerian mobile phone business that racked up losses and was offloaded a few years later for just $10m, and the acquisition of Mweb Africa and Africa Online for a combined total of just more than R750m. These deals took place between 2007 and 2008, at least five years before he was drafted in from Vodacom.
But it looks as if Maseko’s own actions when he took the helm will also come under the spotlight of the SIU, whose jurisdiction is in question because it is a body that was set up to investigate serious malpractices or maladministration relating to state institutions, state assets and public money.
True, Ramaphosa did not say anything specific in an order for the SIU to investigate if there had been violations of anti-corruption laws related to payments made for advisory services regarding Telkom’s mobile and broadband strategy. What we know, however, is that Telkom, under Maseko’s watch, handed Bain a R91m contract without an open bidding process in 2013.
The scope of work for Bain (a consultancy house that was later fingered by the Nugent commission as being in cahoots with former SA Revenue Service head Tom Moyane in a plan to destroy the revenue collection agency) included advice on Telkom’s broadband and mobile strategies.
At the time, the company defended the appointment as being above board, and last week it issued a broad statement saying it followed robust corporate governance principles in executing its strategy to consolidate its operations in SA.
Depending on who you speak to, there’s a lot of money at stake in this investigation — anything between R10bn and R20bn. Is it a case of the long arm of the law or a case of unreasonable desire to punish Telkom for being the stumbling block in the allocation of radio frequency spectrum? Few people know for sure, but commentary elsewhere has pointed to the latter, saying the government maybe is being vindictive because it sees Telkom’s actions — rightly or wrongly — as undermining the economic revival agenda.
We hope that is not the motive.
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