Giant leap is required of a hobbled MTN

THE Latin phrase annus horribilis is apt for the year that has unfolded for what is still Africa’s biggest mobile operator, MTN.

The good news of a possible thawing in relations between Iran and the West — which promised the repatriation of more than $1-billion (about R14.4-billion) from that country — has been wiped out by a crippling fine in Nigeria, its biggest market. Locally, staff discontent and a struggle to maintain market share has been its story.

Even without the Nigerian question, its recently axed Zimbabwean CEO, Sifiso Dabengwa, was surely on a hiding to nothing.

It’s a year MTN and its shareholders must be wishing would end soon. In stock performance terms, this year has been its worst since the dotcom burst in 2001. It’s almost 40% weaker this year, compared with the 47% plunge in 2001, the tail end of the crash that began some two years earlier.

In June 2002, Phuthuma Nhleko stepped down as nonexecutive chairman to take over as CEO. His almost nineyear term took MTN from being the No 2 operator in South Africa to the world’s largest emerging market player.

So for the second time in its history, Nhleko has had to step in to steady the ship, or rather rescue it. This time around, it’s only for six months.

But given the challenges, I think it will be hard to keep to that promise.

Already, the management changes announced this week are in essence just a reimplementation of his managerial lines.

There are a fair number of storms ahead.

Well, there’s the matter of the fine, of course. It may have been reduced in the weeks since his return, but a further reduction and a payment in tranches would be an ultimate victory.

The fact that it’s become a political affair can’t be too comfortable for Nhleko, not famed for his schmoozing skills — or at least, that’s what we have been made to believe.

And then there’s the question of growth, and exactly where it will come from.

Subscriber growth is not going to be as robust as it was in the early years.

The questions are particularly acute in South Africa.

The easy win of voice revenue is now on a long and deepening decline, speeded up by the regulatory push to reduce mobile termination rates.

Data has been the next frontier for a few years now, and competition is fierce.

And not only from longtime rival Vodacom. As deep in trouble as Cell C remains, the operator is to be reckoned with. Telkom is no longer a sleeping giant in this space, with its mobile unit about to break even.

Vodacom and Telkom have well-advanced plans to get into the content game. On this front, MTN under Dabengwa seemed well behind.

There’s a giant leap to be made to get ahead of its

It’s a year MTN and its shareholders must be wishing would end soon

competitors. If the Nigerian fine doesn’t break its legs, the only way that MTN can steal a yard on Telkom’s Sipho Maseko or Vodacom’s Shameel Joosub is through an acquisition.

A few weeks ago, Johnny Copelyn, CEO of Hosken Consolidated Investments, spoke of the red tape holding back growth of his operations, among them Sabido Investments, which owns e.tv.

By the looks of it, it is losing the set-top-box battle to pay-TV behemoth MultiChoice.

Should it prove the case, e.tv’s pay model ambitions are fried, leaving it a little vulnerable. Broadband may be its last hope.

I know I am getting ahead of myself.

But I am in no doubt a dealmaker may be needed to salvage MTN’s long-term prospects.