Can he work some magic?
MTN banks on old boss to deal with Nigeria
AS MTN battles to reduce a record $5.2-billion (R74.4-billion) fine in Nigeria, Africa’s biggest cellphone company is following in the footsteps of Apple and Dell and turning to the person who brought it the most success – a former boss.
Phuthuma Nhleko, the engineering graduate who transformed MTN from a small South African wireless carrier into a telecoms giant with customers in 22 countries, is back at the helm of the company after chief executive Sifiso Dabengwa resigned at the weekend.
The question is, can he recreate the old magic?
“The company brand has taken quite a beating, so changing the man at the top would definitely help,” a London-based Nigeria expert with Teneo Intelligence, Manji Cheto, said.
“There is room to negotiate, but I don’t think the fine is going to go away,” she said.
Nhleko agreed to switch from non-executive to executive chairman for a maximum of six months after Dabengwa took responsibility for the fine and resigned.
The businessman, who was MTN’s chief executive for almost nine years until 2011, will personally handle negotiations with the Nigerian Communications Commission and try to reduce the fine.
The move echoes that of Michael Dell, who stepped down as chief executive of the company he founded in 2004, but returned to lead the business three years later after shrinking sales and an accounting scandal.
Steve Jobs resigned from Apple in 1985 and returned in 1997 to reinvent the company as the inventor of iPods and iPhones.
MTN has until Monday to pay the penalty after it failed to disconnect 5.1 million unregistered subscribers in time.
Under Nhleko the company increased subscriber numbers 30-fold and added new territories including Iran and Syria. The shares gained more than 1 000% during his tenure.
“The fact that Nhleko has such familiarity with the business is clearly positive, but there are concerns that given his high-level involvement in the business he might not be the right person to affect cultural change,” Kigoda Consulting director Mike Davies said.
The Public Investment Corp, MTN’s biggest shareholder with a 13% stake, said on Monday that Dabengwa should not be the only person to take responsibility for the fine.
The board of directors and risk and compliance departments should have prevented the company from falling foul of regulators, the money manager’s chief executive, Dan Matjila, said.
Nhleko was hugely respected in the market, Davies said.
“He’s got experience of doing business in Nigeria so he would be well-placed to deal with the Nigerian regulatory situation.
“But he has a lot of other business interests and it’s unclear how much time he’ll be able to devote to MTN.”
Nhleko is on the board of BP and Anglo American, and he is the chairman of Pembani Group, an investment company that recently bought most of the business interests of Deputy President Cyril Ramaphosa.