Four things you should know about MTN
Finweek gives you the facts about the recent happenings at the telecoms giant.
MTN Group CEO Sifiso Dabengwa resigned on 9 November with immediate effect after the Nigerian regulator fined the group a record $5.2bn (R74bn at current exchange rates) on 26 October for failing to adhere to deadlines in August and September to disconnect 5.1m unregistered sim cards.
It is widely speculated that the high-profile kidnapping of former Nigerian finance minister Olu Falae was the catalyst for the massive fine, as Falae’s kidnappers used phones with unregistered MTN sim cards when they called to demand a ransom for his release. MTN was also unable to provide authorities with the information needed for their investigation.
Former MTN group CEO and current non-executive chairman Phuthuma Nhleko will now take the reins as executive chairman for a maximum of six months while the group looks for a replacement for Dabengwa. Dabengwa was appointed president and CEO of MTN Group in 2011 after serving as MTN Group’s COO for seven years. His MTN career started as managing director of its South African operations. In 2004, he was given a dual role as both COO and CEO of MTN Nigeria, which he occupied until 2006.
Spearheading MTN Group is no unfamiliar task for Nhleko – he was MTN’s non-executive director and chairman between July 2001 and June 2002. He later became executive director, group president and CEO of the telecoms giant for almost a decade, until he vacated the position in March 2011. Under his leadership, MTN’s subscriber base rose to over 150m. In 2013 Nhleko, a civil engineer by profession, was appointed MTN non-executive director and chairman. News of the record fine in Nigeria sent MTN’s shares plummeting, wiping more than R60bn off its market capitalisation. (Also see page 33.) Nigeria is MTN’s biggest market with 62.8m subscribers (compared with SA’s 28.5m, and a total of 231m subscribers in 22 countries). The company was also fiercely criticised for the way it announced news about the fine, with an official statement only issued in the afternoon of Monday, 26 October despite news reports on the matter already surfacing in Nigeria the day before. The delayed communication even prompted the JSE to investigate the company for possible insider trading. News of Dabengwa’s resignation saw the share price close up 1.6% on 9 November. For a smooth transition, MTN would possibly look at one of its vice-presidents, who head up its regional divisions, says Dobek Pater, partner at advisory firm Africa Analysis. Pater says the position requires a strategic thinker. “In my view, it needs to be someone that knows the telecoms market, in particular mobile, and [has] good knowledge of developing markets, particularly in the African space, maybe the Middle East as well,” he says. “Certainly in Africa we have seen in the past that some of the Middle Eastern executives from MTN did not necessarily understand the African environment where the culture is different and the approach to dealing with some issues is different.”
In the meantime, media reports indicate MTN’s largest shareholder, the Public Investment Corporation (PIC), is putting pressure on the telecoms provider, and on its board, to provide an explanation and to develop a turnaround plan. firstname.lastname@example.org