TechCentralTechCentral
    Facebook Twitter YouTube LinkedIn
    Facebook Twitter LinkedIn YouTube
    TechCentralTechCentral
    NEWSLETTER
    • News

      Google’s giant Equiano Internet cable has landed in South Africa

      8 August 2022

      The African tech start-ups eyeing global markets

      8 August 2022

      Karpowership loses bid to overturn environmental ruling

      8 August 2022

      New app launched to tackle potholes in South Africa

      8 August 2022

      Rogue database felled Capitec in its worst-ever IT outage

      7 August 2022
    • World

      Nvidia issues profit warning on slump in demand for graphics cards

      8 August 2022

      Buterin: Mining on Ethereum Classic won’t affect Merge

      8 August 2022

      Musk challenges Twitter CEO to a public debate

      7 August 2022

      Amazon splashes $1.7-billion on Roomba maker iRobot

      5 August 2022

      Nigeria asks Google to block banned groups from YouTube

      5 August 2022
    • In-depth

      The length of Earth’s days has been increasing – and no one knows why

      7 August 2022

      As Facebook fades, the Mad Men of advertising stage a comeback

      2 August 2022

      Crypto breaks the rules. That’s the point

      27 July 2022

      E-mail scams are getting chillingly personal

      17 July 2022

      Webb telescope’s stunning images of the cosmos

      12 July 2022
    • Podcasts

      How South Africa can woo more women into tech

      4 August 2022

      Book and check-in via WhatsApp? FlySafair is on it

      28 July 2022

      Interview: Why Dell’s next-gen PowerEdge servers change the game

      28 July 2022

      Demystifying the complexity of AI – fact vs fiction

      6 July 2022

      How your organisation can triage its information security risk

      22 June 2022
    • Opinion

      SIU seeks to set aside R215-million IT tender

      19 July 2022

      No reason South Africa should have a shortage of electricity: Ramaphosa

      11 July 2022

      Ntshavheni’s bias against the private sector

      8 July 2022

      South Africa can no longer rely on Eskom alone

      4 July 2022

      Has South Africa’s advertising industry lost its way?

      21 June 2022
    • Company Hubs
      • 1-grid
      • Altron Document Solutions
      • Amplitude
      • Atvance Intellect
      • Axiz
      • BOATech
      • CallMiner
      • Digital Generation
      • E4
      • ESET
      • Euphoria Telecom
      • IBM
      • Kyocera Document Solutions
      • Microsoft
      • Nutanix
      • One Trust
      • Pinnacle
      • Skybox Security
      • SkyWire
      • Tarsus on Demand
      • Videri Digital
      • Zendesk
    • Sections
      • Banking
      • Broadcasting and Media
      • Cloud computing
      • Consumer electronics
      • Cryptocurrencies
      • Education and skills
      • Energy
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Motoring and transport
      • Public sector
      • Science
      • Social media
      • Talent and leadership
      • Telecoms
    • Advertise
    TechCentralTechCentral
    Home»In-depth»Finally, some clarity from MTN

    Finally, some clarity from MTN

    In-depth By Patrick Cairns10 November 2015
    Facebook Twitter LinkedIn WhatsApp Telegram Email
    Phuthuma Nhleko
    Phuthuma Nhleko

    After two weeks of uncertainty in which its share price fell by 17,5%, MTN finally provided some clarity to shareholders on Monday. The announcement that CEO Sifiso Dabengwa had resigned with immediate effect led to the first substantial engagement with the market since the operator was issued with a 1,04 trillion naira (US$5,2bn; R75bn) fine by the Nigerian Communications Commission (NCC) for failing to disconnect 5,2m unregistered sim cards.

    It was not just the news that Dabengwa had stepped down or that former CEO Phuthuma Nhleko would act as executive chairman for six months that brought some comfort to investors. The operator finally showed a willingness to engage more thoroughly on the issues it is facing in Nigeria.

    As a starting point, MTN group executive for corporate affairs Chris Maroleng said that Dabengwa’s resignation should not be taken as an admission of guilt.

    “Effectively, Mr Dabengwa said that he was stepping down in the interests of the company and its shareholders,” he said. “And our position as MTN has been quite clear in that we think it is important that his resignation isn’t necessarily seen as an indication of any wrongdoing on his part.”

    The announcement appeared to lift both sentiment towards the company and its the share price. The consensus was that Dabengwa had done the right thing.

    “It was the honourable thing to do,” said Jean Pierre Verster of 36ONE Asset Management. “It would seem that Dabengwa has fallen on his sword and taken responsibility for the material issue of the fine imposed by the NCC, whether he was directly responsible or not. Whether it was those in charge of MTN Nigeria or the head office who blundered, ultimately, the buck stops with the CEO.”

    CEO at Contego Asset Management JC Louw agreed. He said that Dabengwa’s decision was “a step in the right direction”.

    “The company needed a wake-up call, to get good compliance, risk management and governance back, as they are perceived to have dropped the ball in this instance,” he said. “Fresh blood and new energy might be exactly what is needed at the moment as it will show their willingness to commit to negotiations and corrective measures.”

    Efficient select analyst Callan Williamson pointed out that Dabengwa’s tenure has been a difficult one, and that the Nigerian fine was probably “the last straw” for him.

    “Longer term this should be positive for MTN, assuming they fill the post adequately and can put an end to the high turnover of senior management seen recently,” Williamson said. “It’s very unclear what this means behind the scenes at the negotiation table with the NCC, however it’s unlikely MTN would have made such a drastic move if it was going to in any way hurt its bargaining power of getting the fine reduced.”

    MTN’s Maroleng also tried to allay concerns that MTN’s relationship with the Nigerian authorities was dysfunctional. Given the size of the fine and that sources have indicated that the operator had still been in consultations with the regulator about the exact number of Sim cards that needed to be disconnected when the penalty was levied, there has been speculation that the two parties do not see eye to eye.

    However, Maroleng said that the fact that the NCC had renewed MTN’s operating licence last week for a further five years and that it had at the same time harmonised the expiry of the operator’s various licences was an indication of exactly the opposite.

    “We are engaged with the regulator and our relationship, notwithstanding the fine, remains cordial,” he said. “We do have a good working relationship and there is a good level of trust.”

    He also responded to the speculation that the company had failed to take security concerns seriously in the way it dealt with the problem of unregistered sim cards. In particular he was candid on whether or not MTN had been unable to provide information to security agencies with regards to the kidnapping of former finance minister Olu Falae in September.

    “We would be interested to see confirmation of the request for such information,” Maroleng said. “We cooperate fully with law enforcement authorities when lawful requests are made in terms of providing information on subscribers on our network, and we do take this very seriously.”

    Sifiso Dabengwa
    Sifiso Dabengwa

    Nhleko back in charge
    Maroleng also stressed that the board was confident that Nhleko was the man in the best position to lead the company through the current difficulties given that he was behind MTN’s entry into Nigeria in the first place.

    “The board believes that it is necessary, given the gravity of current events and the need to act swiftly, that a man like Mr Nhleko be brought in to oversee operations and our engagement with authorities in Nigeria, particularly given his depth of experience,” he said.

    The decision to appoint Nhleko as executive chairman was also met with widespread approval. CEO of Anchor Capital Peter Armitage said that “Nhleko is well respected and well positioned to help resolve the situation”.

    Investment professional at Old Mutual Equities Philip Short said that it “made sense” for Nhleko to take over at head office. However, there are still questions around MTN’s management in Nigeria itself.

    “I expect local MTN Nigerian management will come under the spotlight, not only in their handling of the Sim deregistering issue, but also MTN’s general lacklustre operational performance over the past 18 months,” Short said.

    While Maroleng would not comment directly on what steps MTN was taking to address management failings in Nigeria, his response suggested that more may come to light in due course.

    “We have not updated the market at this stage or made any decision that we have publicised about the management of our Nigeria operations,” he said.

    Which implied that things may be happening, but the operator isn’t willing to talk about them yet.

    Nevertheless, there won’t be any kind of quick fix. Clearly MTN has some serious problems to resolve in its Nigerian operations whether it ends up paying the full fine or not.

    “Replacing the CEO, temporarily or permanently, will not resolve the operational issue in Nigeria any time soon,” said Short. “It is difficult to turn such a large company around, especially when you’re on the back foot. For example, in Nigeria, certain mobile operators have been successful in grabbing market share from MTN and have built up strong brand equity. In addition, MTN Nigeria will be facing a determined and invigorated regulator who will now feel it has the power to enforce its will on all the mobile operators.”

    MTN shares closed the day 1,6% higher at R160,01.

    • This article was first published on Moneyweb and is used here with permission
    36ONE Asset Management Anchor Capital Callan Williamson Chris Maroleng Contego Asset Management JC Louw Jean Pierre Verster MTN MTN Nigeria NCC Nigerian Communications Commission Peter Armitage Phuthuma Nhleko Sifiso Dabengwa
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email
    Previous ArticlePSL boss hired by MultiChoice
    Next Article Uber, WesBank in R200m car rental deal

    Related Posts

    The length of Earth’s days has been increasing – and no one knows why

    7 August 2022

    Solidarity, MTN in war of words over restructuring

    5 August 2022

    MTN’s big fight against ‘revenge crime’ at its base stations

    3 August 2022
    Add A Comment

    Comments are closed.

    Promoted

    You don’t need a call centre to take advantage of call centre technology

    5 August 2022

    Black man, you are still on your own

    5 August 2022

    UC&C interoperability offers businesses operational cost relief in tough times

    4 August 2022
    Opinion

    SIU seeks to set aside R215-million IT tender

    19 July 2022

    No reason South Africa should have a shortage of electricity: Ramaphosa

    11 July 2022

    Ntshavheni’s bias against the private sector

    8 July 2022

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2022 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.