“Poor” old Sifiso Dabengwa. Yesterday the man from Zimbabwe finally became the fall guy of the mess that is called MTN. At least that is what it looks like on the surface. But Dabengwa’s undoing was his own to sew.
Unapproachable, reclusive and living in his own world, Dabengwa behaved as if MTN was his personal fiefdom. So when he was finally shown the door as MTN’s chief executive, all that the world received was a terse statement that he was doing so in the good name of the company.
Well, the truth is I could not muster even one tear to shed for his departure. My eyes rebelled against me for wanting to cry for this man who has become the anathema of everything that is wrong with the company, whose founding ran parallel to that of the new South Africa.
In a way, Dabengwa is a victim of his own making. He presided over MTN when it was a stellar South African brand and effectively ran the company almost to its knees. It did not help that he was surrounded by a board of directors that just wanted to see and hear what they wanted, instead of looking at what was happening in the real world.
This kind of arrogance, and the belief that the company could survive without bothering itself about what its stakeholders were saying, point to the way in which Dabengwa and his board ran MTN. Surely, shareholders expected more from a person who pocketed R28.1 million in 2014. Now we know, even that monster payout could not guarantee success. Where was the board in all of this? What was their job?
Boast
For a while now MTN has been one of the few success stories that post-apartheid South Africa could boast about. From humble beginnings, the company gambled on many deals that included venturing into the unpredictable worlds of Africa and the Middle East. The gamble paid off when the company grew to be the largest network operator in Africa and scored record profits from its decision.
Behind this success was the name Dabengwa, who led the company’s venture into west Africa and was rewarded not only with the appointment as the group chief executive, but became one of the highest paid executives in South Africa.
But the beautiful sound of the cash register at its headquarters and the pay cheque made the company so power drunk that it forgot that it owed its very success to the very customers and shareholders it had stopped paying attention to.
Little wonder then that when news broke out that the Nigerian Communications Commission had slapped MTN with a $5.2 billion (R73.52bn) fine for failing to disconnect millions of unregistered subscribers from its network, MTN refused to say more than it was prepared to share with the world. It marshalled its spin doctors to sing a song that it was involved in negotiations with the commission and there should be no need to panic.
But the markets could not be fooled and they knocked its share price down, wiping out more than R70bn in MTN’s market value. Shareholders were also left wondering as to why should they rely on information from the media before anyone could take their concerns seriously as the company dithered.
Last week I spoke to a colleague about the happenings in the company. He told me about how MTN had made a client pay out the contract of a late spouse simply because they could not cancel the contract. Such insensitivity should, therefore, be a lesson on how not to run a company.
And this year’s protracted strike by MTN workers should have taught the company that it could not remove itself from the real world. Instead of dealing with the grievances of its staffers, MTN bosses just looked at them as an irritation that would someday shout itself hoarse.
Dumped
The results were that customers – who wanted their queries on little things like how much airtime they still had left on their phones or how to recharge – dumped the company and went to look for those that would take them seriously. So when it finally dawned on MTN that reality was more powerful than its wishes, it sacrificed Ahmad Farroukh, announcing that he would leave at the end of July.
“This was a difficult decision to take for Ahmad, but unavoidable due to personal and family reasons,” Dabengwa pontificated at the time. This week it is Dabengwa’s turn.
Its shareholders, from the powerful Public Investment Corporation to Old Mutual, raised concerns about the information that they were fed. And yet when the questions escalated, Dabengwa took the fall and resigned all in the name of the company.
Under normal circumstances this should be a celebrated move. But Dabengwa should not be the only one to bite the dust as a result of MTN problems.
The board, which includes some powerful names in business, should also do the right thing and resign, because by commission or omission, they are as liable for the problems at MTN as Dabengwa.
South African companies should study the MTN problems and take lessons on how not to run companies to the ground. But they can only do so if they start listening to the real world and stop behaving as if they are larger than life.
BUSINESS REPORT