MTN scrambles to appoint a new CEO
JOHANNESBURG - MTN will announce a new chief executive within the next two months as its current head, Rob Shuter, is set to leave the group earlier than expected, the telecoms operator said on Friday.
MTN also announced that it was parking its interim dividend for the six months to the end of June to preserve cash on Covid-19 uncertainty.
MTN said Shuter, 52, who succeeded Sifiso Dabengwa in 2017, would relocate to the UK to head the BT Group’s enterprise unit, adding that it would announce his successor within the next two months.
“The succession process for the MTN group chief executive role is on track and MTN expects to announce it in the next four to eight weeks.
“Current group chief executive Shuter will complete his fixed four-year contract in March 2021 as announced earlier this year, and this timing will enable a seamless handover to his successor,” said the company.
In March, MTN announced that Shuter would step down at the end of March next year after he completed his four-year fixed-term contract.
In a trading update released on Friday, MTN, Africa’s mobile giant, confirmed a strong first half of the year, saying it was preparing to report bumper earnings during the year to the end of June.
MTN suspended the interim dividend as the impact of Covid-19 on its key African markets was weighing on short-term investor sentiment.
The group said it had made meaningful progress in strengthening its financial position and maintaining a healthy liquidity position.
“In order to sustain this, and in line with MTN’s capital allocation framework, the board has decided not to declare a 2020 interim dividend in the context of the Covid-19 impacts and the material uncertainties these present. Should conditions warrant a final dividend, this would be no more than R3.90 per share, aligned to the current dividend policy,” said the company on Friday.
The suspension of the dividend eclipsed the group’s expectations that growth in earnings per share would be between 160and 170percent.
MTN said that earnings per share growth included the benefit from gains amounting to R3.41 on the disposal of the ATC Uganda and ATC Ghana tower joint ventures as announced in March this year.
Headline earnings per share growth was expected to be between 115 and 125percent after benefiting from non-operational items, including foreign exchange gains.
Commenting on the trading update, Peter Takaendesa, the head of equities at Mergence Investment Manager, said that MTN had posted a strong operational result in the first half of the year, but was overshadowed by the near-term outlook and no cash returns to shareholders.
“Many other cyclical companies have suspended dividends in South Africa, but we believe the market expected telecoms companies to have been relatively resilient during Covid-19 as usage grew and therefore expected some form of a dividend to be paid.
“Given a very uncertain economic environment in many African countries, and where MTN’s holding company’s balance sheet is, we support the group’s prioritisation to preserve cash and protect the balance sheet,” said Takaendesa.
MTN shares closed 2.46percent lower at R59.14 on Friday.