The share price of Africa’s largest mobile operator, MTN, rose 2.78 percent on the JSE after it announced several changes to its board in a bid to strengthen its executive team. The share closed at R105.30 recently.
MTN has appointed former deputy minister of finance Mcebisi Jonas as it’s chairperson-designate to replace Phuthuma Nhleko, who is stepping down in mid-December.
Jonas is no stranger to the MTN board. Last May, he was appointed as an independent non-executive director after being fired by then-president Jacob Zuma in 2017.
Nhleko has delayed his departure by six months to oversee the formation of the international advisory board (IAB), which he would serve as a member.
The five-member IAB will be chaired by former president Thabo Mbeki and will include former President of Ghana John Kufuor; Dr Aisha Abdullahi, former African Union commissioner for political affairs; Dr Mohammed el Baradei, former director general of the International Atomic Energy Agency; and Dr Momar Nguer, president of marketing and services Total SA.
MTN said the main purpose of the IAB would be to counsel, guide and support the MTN Group from time to time in fulfilling its vision and objective of being one of the premier African corporations with a global footprint in telecommunications, contributing to increased digital inclusion in Africa and the Middle East, a pivotal aspect of the fourth industrial revolution.
Other key changes include Dr Khotso Mokhele, who will become a lead independent director from December 15, and Lamido Sanusi, a Nigerian national and former governor of the Central Bank of Nigeria and Vincent Rague, a Kenyan national who worked for the International Finance Corporation, both with effect from July 1.
Alan Harper, Jeff Van Rooyen and Koosum Kaylan will step down from the board on December 15, while Peter Mageza and Dawn Marole would step down next year.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said there were two important things that the MTN board had announced: the appointment of new non-executive directors and setting up of a new IAB.
“One of the key challenges MTN has faced in the past five years has been costly fines from African governments, especially in West Africa, and our view is that some of those sanctions were due to weaker relationships with relevant stakeholders. We, therefore, believe that the well-respected new non-executive directors and members of the IAB will go a long way in reducing those risks,” Takaendesa said.
Nhleko led negotiations after the group fell out with Nigeria after local authorities slapped MTN with a $5.2 billion (R74.48bn) fine in 2015 for failing to disconnect unregistered SIM cards on its network.
The fine was later reduced to $1.7bn after a series of negotiations with the Nigerian government, with the fine leading to MTN reporting losses for the first time in its 2016 financial results.
Last September, MTN was ordered by Nigeria’s central bank to refund about $8.13bn that it allegedly had illegally repatriated from the country.
Takaendesa said there was no doubt on the contribution that Nhleko has made on connecting the African continent to telecommunication services and the fruits of his vision decades ago would continue to benefit many stakeholders for decades to come.
“His influence on MTN will be diluted going forward, but his guidance will not be lost, as he will join the IAB. However, a number of investors in MTN have been calling for an independent chairperson to strengthen corporate governance further, and Jonas has been asked to step into that position.
There is no guarantee that problems in Nigeria will become a thing of the past, but Jonas will have very strong support from both the newly appointed non-executive directors, including former Nigeria central bank governor, and IAB with solid African leadership experience,” Takaendesa said. He said MTN was now in a much stronger position compared with where it was 12 to 18 months ago.