Johannesburg - MTN is making the right calls. Yesterday it got a vote of confidence from the Public Investment Corporation (PIC) in its executive changes and has regained its crown as Africa’s most valued telecoms provider.
This as it came under fire from the Black Management Forum (BMF) for its appointment of Rob Shuter as the chief executive as “a serious blow to transformation”.
By 2.47pm yesterday, MTN’s market capitalisaton was at R274 billion, with Vodacom valued at R248.41bn.
Earlier this year, it lost its top position as it battled with Nigerian authorities over the payment of a record fine of $5.2bn (R76.4bn at yesterday’s rate), which had spooked the market.
On May 12, the beleaguered company’s market capitalisaton had fallen to a dismal low of R238bn.
However, after negotiating a lighter fine of $1.67bn, in just more than a month, the company has managed to recover lost ground to gain R23bn.
Daniel Matjila, the PIC chief executive, said yesterday that he shared the sentiment of the BMF on Rob Shuter being appointed the chief executive of MTN and would have preferred a black boss.
However, having noted the appointment of Shuter, as well as other appointments, the PIC expected these to strengthen risk management and governance at MTN, he said.
The appointments would assist MTN in achieving its strategic objectives and increasing shareholder value, Matjila added.
“It is, however, important to emphasise that the appointment of senior management of companies is the prerogative of the board of directors, who are expected to act in the best interests of the company and shareholders.
“While the PIC remains the biggest shareholder in MTN, it equally respects the authority of the board where it concerns senior appointments,” he said.
But the key social issue of transformation remained important to the PIC and “we continue to impress on companies the need and benefits of embracing transformation”, Matjila said.
MTN now faces the listing of MTN Nigeria on the Nigerian Stock Exchange on top of the executive changes.
Unions and analysts earlier this week welcomed the appointment of Shuter as the right man to lead the telecoms company and restore its credibility with investors.
Shuter takes over the leadership of MTN, with its footprint spanning 22 countries, with many challenges ahead.
In an interview in Vodafone’s Intouch integrated annual report 2014 to 2105, Shuter acting as the chief executive of Vodafone Netherlands said running a company could be compared with running a marathon.
“It’s not a sprint.
“The real art is preserving your energy and spirit for a prolonged period of time. Three quarters of a marathon is simply great fun… It’s the tough things that matter and that give you satisfaction.
“You can only be proud if you have turned something difficult into a success and you have really accomplished something,” he said.
Shuter faces a tough road ahead of restoring both investor and consumer confidence in the MTN brand.
Chris Moerdyk, an independent brand analyst, said yesterday that MTN had been a great brand, but it could do more to reassure investors.
MTN has had problems in Iran and Nigeria. “If you look at historical performance, investors overlook it and see it as a good brand,” he said.
But consumers viewed MTN in a different light, he said.
MTN and Vodacom had been “running roughshod” over customers and South Africa still had exceptionally high voice and data tariffs compared with global pricing.
MTN had called for the Independent Communication Authority of SA to investigate over-the-top operators, such as WhatsApp.
Moerdyk said this move showed an arrogance towards consumers and an entitlement to profit.
Ultimately you would be hard-pressed to find any consumer that says “I love MTN”, he said.
“MTN can do a huge amount to improve their brand. Whether they bother is a different question.”
BUSINESS REPORT