Phutuma Nhleko. Picture: FREDDY MAVUNDA
Phutuma Nhleko. Picture: FREDDY MAVUNDA

In an effort to bolster its governance structures, mobile operator MTN has announced a shake-up of its board of directors which sees long-time leader Phuthuma Nhleko’s active role at the company coming to an end in December.

Former deputy finance minister Mcebisi Jonas will take over as chairman when Nhleko steps down in December. Nhleko will sit on MTN's international advisory board that will be chaired by former South African president Thabo Mbeki.

MTN’s group CEO from 2002 to 2011, Nhleko is credited for growing MTN’s presence in more than 20 markets across Africa and the Middle East. He returned to the group as chairman in 2013 when Cyril Ramaphosa vacated the position to resume his political career.

Mergence Investment Managers portfolio manager Peter Takaendesa said that while Nhleko was CEO, “MTN did very well”, becoming Africa’s largest telecommunications operator.

MTN is valued at R198.4bn.

After rapid growth over the past two decades, MTN was moving into a mature phase in the business life cycle. As growth was harder to come by strategy had to shift to defend the business, Mish-al Emeran, equity analyst at Electus Fund Managers said.

During Nhleko’s time as CEO MTN was in a growth phase, Emeran said. Nhleko was good at recognising the need to chase market share, expand territories and execute a high-growth trajectory. 

“It was always a high-growth, high-risk business, so risk management was key, but that fell away to some extent when he left [as CEO],” said Takaendesa.

In 2015 MTN had its first major run-in with an African government. Nigeria slapped a $5.2bn fine on the operator for failing to disconnect unregistered SIM cards in the country.

While that fine was later reduced, the company later ran into more troubles in the West African state — its biggest market — and in other African countries, including Benin.

“Phuthuma had structures in place to manage risk — for example, he had regional executives to monitor big geopolitical developments — but those were removed in favour of a country structure,” Takaendesa said.

Emeran said telecommunications operators were under fire across the world from new technology. In addition, regulators wanted the best for consumers but they also wanted efficient communications networks for economic growth. Companies needed different skillsets from executives and their boards.

“They need to reduce potential regulatory risk,” said Emeran.

“You could argue that the issues in Nigeria were because of a lack of understanding or a lack of risk management, specifically from a regulatory perspective.”

The newly announced advisory board, on which Nhleko will join a number of high-profile individuals from across Africa would better place the company to negotiate regulatory environments across its different territories.

“From the board changes we’ve seen, in my view it looks quite favourable,” Emeran said. 

Nhleko continues as chairman of Pembani Group, and serves on the board of Anglo American and BP. Formerly he was on the board for Old Mutual, Nedbank, Bidvest Group and Alexander Forbes among a number of notable positions. He is reported to have a net worth of R1.7bn. 

Takaendesa credited Nhleko with rapidly expanding connectivity across the continent.

“No one can speak of telecoms in Africa without mentioning Phuthuma Nhleko.”

gavazam@businesslive.co.za