Four things you should know about MTN

Fin­week gives you the facts about the re­cent happenings at the tele­coms gi­ant.

Finweek English Edition - - THE WEEK | IN THE NEWS -

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. ed­i­to­rial@fin­week.co.za

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.