By March next year every one of the major SA
telecommunications operators would have replaced the CEOs who ran the
show in the good old protectionist days. Three of them got the wrong
guy for the job. Now MTN has one year to replace Phuthuma Nhleko. Maybe
it will get lucky. Again.
If he had been
vacating his office at the end of June (rather than staying on for an
extra year after his contract expires in June), we may have speculated
that Phuthuma Nhleko had been pushed.
Not that you can fault him on the share price performance during his
tenure. With him as CEO, MTN was a money machine for investors and
handily outpaced Vodacom, which was admittedly paralysed by infighting
among its shareholders, but remains the only valid comparison in the
market.
Even so, recently all has not been well at MTN. Its brand image
among customers still suffers, and will do so for a long time to come,
because of a disastrous billing system switch that caused
double-billing, over-billing, and was compounded by a remarkably poor
response to customer complaints. It spent a lot of time and attention
on what would have effectively been an acquisition by India's Bharti
Airtel, and put its own expansion outside of Africa on the back burner,
only to watch that deal crumble. And the expensively aggressive move
into Iran – wannabe nuclear power and holder of dubious elections
– could still, in hindsight, turn out to be a disaster. Or it could
turn out to be as visionary as the decision by Paul Edwards, Nhleko's
predecessor, to bet the farm on Nigeria – a bet which profits from that
country have repaid many times over.
Edwards, and his determination to replicate MTN's success elsewhere
in Africa while most other companies still thought there was no money
to be made north of the Limpopo, arguably laid the groundwork for MTN's
current success. When Nhleko took over in mid-2002, however, a lot of
the nuts-and-bolts work remained to be done, and not everyone thought
he was the man for the job. He had achieved wonders in structuring
empowerment deals and was clearly a master strategist, but many
investors worried that there was no proof he possessed any practical
leadership abilities.
Those worried investors were gradually placated, then impressed, and
finally elated as Nhleko seemed to make all the right calls. And not
only for the company. By structuring a hybrid between an empowerment
deal and a management buy-out at a time when the global telecoms market
was depressed but the SA government had to get rid of a lingering stake
in MTN, Nhleko earned himself (and fellow executives) several hundred
million rand. Bonuses made him the highest paid technology CEO in the
country, with remuneration in the region between R15 million and R20
million per annum in recent years. Saying he made out like a bandit
would be an understatement.
Nonetheless there were far fewer complaints about him than any of
the more recently appointed heads of telephone companies in South
Africa.
Telkom CEO Reuben September has shown no indication that he has a
strategic plan for the company, failing to implement the rather
promising scheme by a predecessor to turn SA into an African
telecommunications hub, and abandoning at enormous cost an even more
promising plan to turn Telkom into a consumer media provider. Vodacom
CEO Pieter Uys has none of the charisma of predecessor Alan
Knott-Craig, and as a vassal to Vodafone seems to have even less
freedom than did Knott-Craig while he played Telkom and Vodafone
against one another. Cell C has had a succession of leaders who have
managed only to cement its status as an also-ran. Current chief Lars
Reichelt is betting that the company can build the fastest wireless
data networks in the country, apparently ignorant of the fact that
there are four companies with more money and superior technical
abilities doing the same, only better.
It's not entirely their fault. Telkom, Vodacom and Cell C all have
historical problems that hold them back, and they all operate in a
market where everybody is still trying to figure out how to handle
liberalisation. MTN seems unaffected mostly because South Africa is
only a subsidiary of a global group.
If MTN is to do more than tread water, however, it needs to get
lucky in leadership again. Quite likely it will do so in the form of
Sifiso Dabengwa, the group chief operating officer and the closest
thing the company has to an internal successor who is acceptable both
politically and to shareholders. Can he do the job? Ask us again ten
years from now. |