So why did U Mobile sack its CEO?

  • Operational review turned up issues which led to suspension just before Raya
  • Issues media release on sacking, refuting a portal report that its CEO resigned

So why did U Mobile sack its CEO?A ONCE high-flying career in the telco industry now lies in tatters as U Mobile Sdn Bhd, the fourth largest mobile player, has sensationally fired its chief executive officer, Jaffa Sany Ariffin (pic), on Merdeka Day, in what it described as “disciplinary action.”
In a statement released to the media Sept 1, U Mobile further emphasised that it “subscribes to the highest standards of corporate governance.”
Jaffa had been appointed CEO on June 1, 2012, taking over from predecessor Kaizad Heerjee.
The U Mobile statement came on the heels of an article by news portal The Malaysian Insider on Aug 30 which had first reported that Jaffa had resigned over alleged differences of opinion with shareholder Vincent Tan over the future direction of the company.
Yet an executive familiar with the circumstances of the situation tells Digital News Asia (DNA) that there was no clash with Tan. “That is not true; the Singaporeans have management control over U Mobile despite owning 49% of the company.”
Straits Mobile Investments Pte Ltd, a unit of ST Telemedia in Singapore, bought into U Mobile in March 2010 with a reported RM1 billion (US$303 million) for a 33% stake that it acquired from Tan.
“They appointed him and it was them, together with the second largest shareholder U Telemedia Sdn Bhd at 37% (owned by Tan), which agreed to the sacking that came about after an operational review turned up certain issues,” said the executive, who preferred not to be named.
Apparently Jaffa was suspended at first, just before Hari Raya. When DNA pressed if the sacking had anything to do with any financial irregularities, the executive would only say, “Read the release and draw your own conclusions.”
The swiftness of the sacking does leave U Mobile open to industrial action, if Jaffa chooses that route to defend his reputation.
Meanwhile industry players DNA spoke to have mixed views on the impact of this on U Mobile and the momentum that is has built over the past 15 months of Jaffa’s tenure.
It is undeniable that its subscriber base has been rising from the over two million that Jaffa inherited from Heerjee’s tenure to just under five million in late July when Jaffa last appeared at a press conference as CEO.
He said then that the subscriber rate was under five million but expected to grow rapidly to 6.5 million by the end of the year. That’s a stunning monthly average of at least 300,000 subscriber additions.
Interestingly, the statement from U Mobile made deliberate mention of this growth and credited it to a cross section of stakeholders.
“The continuous growth momentum is largely due to the bold business and marketing strategies adopted by the company. U Mobile's strong achievement is a testament to the alignment of interests and commitment from all the stakeholders involved including shareholders, management and employees,” it said in its statement.
According to a telco vendor, the impact will be minimal as U Mobile will continue to buy market share and be a price leader.
A telco consultant, however, feels that any leadership change negatively affects the confidence of stakeholders. “Plus, business decisions can go on hold and momentum gets disturbed.”
Two other senior telco executives also point to the morale blow that happens when a CEO leaves in such circumstances, with one wondering if the company structure has a flaw. “The previous CEO, Kaizad, left after his contract expired but you wonder why he was not retained,” said one executive.
Wong Heang Tuck, the current chief operating officer of U Mobile, who joined on July 12, will assume the role as acting CEO until further notice.
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