Telkom SA fell to its lowest in more than a month as Chief Executive Officer Nombulelo Moholi resigned amid a struggle to raise capital necessary to expand into broadband and mobile services.
Shares in the Pretoria-based company dropped as much as 3.8 percent and closed 3.1 percent lower at 17.61 rand in Johannesburg, the lowest level since Oct. 1. About 2.4 million shares changed hands, or 172 percent of the daily average for the past three months.
Moholi, an engineer with 24 years of experience in the telecommunications industry, will become the fifth CEO to leave Africa’s largest fixed-line operator in the past eight years. She has given the company six months notice of her intention to quit before her contract expires, Telkom said without giving a reason for her departure.
Telkom has asked the government, its largest shareholder with a 39.8 percent stake, to approve the sale of part of the company as it seeks to expand into broadband and mobile markets. The government blocked the sale of a 20 percent stake to South Korea’s KT Corp. this year, saying it was a strategic asset to South Africa.
“She’s definitely highly regarded in the telecommunication industry,” Rudi van der Merwe, head of stockbroking at Standard Bank Group Ltd., said of Moholi by phone from Johannesburg. “The government’s shareholding and influence creates a lot of uncertainty at Telkom.”
It is critical that stability is established at the executive and board levels as the entity has been losing value over an extended period of time, the country’s Public Investment Corp., which manages the pensions of government workers, said in an e-mailed statement today. The PIC owns 10.6 percent of Telkom’s issued stock, according to data compiled by Bloomberg.
Telkom will start the search for a new CEO once it fills other spaces on its board, which needs at least eight members. Moholi’s planned exit follows that of Chairman Lazarus Zim, who stepped down after the group’s annual meeting last month. Non-Executive Director Neo Phakama Dongwana also left the board as of Nov. 2 after holding the position for nine months, the company said.
Telkom said on Oct. 24 that it had appealed to the South African government to allow it to sell a stake and is now waiting for a response.