Friday, 23 August 2013

Former MTN Group CEO Phuthuma Nhleko returned to the firm recently as chairman

Former MTN Group CEO Phuthuma Nhleko returned to the firm recently as chairman. While he has been praised for MTN's impressive growth during his tenure, his appointment has raised corporate governance questions. Thabiso Mochiko explores what this means

In almost a decade that Phuthuma Nhleko ran MTN Group, the cellphone company emerged from being part of a huge pack of single-country operators to an emerging markets telecoms giant.

It has become the largest operator in Africa and the Middle East, with services in 22 countries. The company is now the largest locally based stock on the JSE and the world's eighth-largest cellphone operator by market capitalisation. It is 20% larger than Anglo American.

The Nhleko comeback

Then Nhleko left, only to return in June this year. The return of the man known as a media-shy executive but aggressive deal-maker who grew MTN into what is now a R350bn company has raised eyebrows. This is largely because he returns to a company that, despite its successes, now sits at something of an existential crossroads.

Nhleko returns as non executive chairman rather than CEO and is deferential about his role as background guide and mentor. He is also at pains to underline the foreground, policy-making function of former colleague Sifiso Dabengwa, who replaced him as MTN Group CEO.

"There are two misconceptions here. Coming back as a nonexecutive chairman, I have no operational responsibilities. I will not have responsibilities for strategy. Both those are firmly the prerogative management," Nhleko said in a rare interview.

"I will be supportive and engage in robust debate where necessary but this is really a management-driven platform." The second misconception is that MTN's growth was primarily a result of acquisitions. "There was a considerable amount of organic growth precipitated by good operational and management structures," he says.

This may be true but it's hard not to notice the differences in style of the two executives. The dissimilarity is partly explained by the context in which each has operated: Nhleko inherited a nascent operation in a formative stage of the industry; Dabengwa took over a company approaching early maturity.

Yet there is a nagging concern over the efficacy of the new arrangement in which, effectively, a powerful and widely respected former CEO returns to a company faced with multiple challenges.

Under Nhleko, MTN's expansion was impressive, based on the unfashionable view at the time that the African market was an attractive growth prospect. In retrospect, it appears visionary. READ MORE

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