Report says MTN is enmeshed in shareholder meddling, but company says “not true”

Public Investment Corporation, the largest shareholder in MTN Group Limited, is said to have initiated a change in the company’s management, whilst calling for the retirement of MTN Group‘s chairman.

The investment company recently increased its stake in MTN Group Limited to 26% and was said to have utilised the period to demand the replacement of the Group’s Chairman, Phuthuma Nhleko.

MTN Group‘s CEO, Rob Shuter, had earlier confirmed Public Investment Corporation‘s interest in the company. He also supposedly noted that the South African-state owned fund manager (that is Public Investment Corporation) had been emphatic about a board evolution.

Factors that prompted the call: MTN has been going through regulatory, legal and political disputes in Africa, a situation that has significantly affected the brand’s outlook. For example, MTN Nigeria is currently;

• going through regulatory, legal, and political disputes in Nigeria.
• The company has two court cases against the Attorney General of the Federation and the Kogi State government. The battle between the AGF and MTN Nigeria is a $2 billion tax dispute.
• MTN Nigeria was also fined by the regulatory body, the Nigerian Communications Commission (NCC).
• MTN Nigeria was fined $5.2 billion in October 2015, which was eventually settled for less than $1 billion after negotiations and was completely paid off on May 24, 2019.

Uganda crises

• In Uganda, MTN was accused by the country’s President Yoweri Museveni, of taking advantage of the East African nation after renewing its operating license lesser than the stipulated amount.
• The dispute snowballed into Uganda deporting the Chief Executive Officer of MTN Uganda, Wim Vanhelleputte and two other top executives over ‘national securities‘. It should be noted that seven days ago, Vanhelleputte was granted ‘unconditional return‘ to Uganda by the President three months after deportation.
• Uganda has since been pressurising MTN to list its shares on Uganda’s stock exchange to enable local shareholders and keep the bulk of MTN Uganda‘s revenue within the country.

Note: MTN Nigeria agreed to list on the Nigerian Stock Exchange after coming under scrutiny from the Nigerian Government and to negotiate the $5.2 billion fine.

Why the restructuring matters: Public Investment Corporation wants politically-connected directors and advisers who can easily navigate the terrain where MTN‘s subsidiaries are facing sanctions. These appointees are believed to have the contacts of lawmakers and other significant government officials on speed-dial.

The appointment has since been done, leading to the reorganisation of the company’s board.

Who’s in and out? Nhleko successor, Mcebisi Jonas, is expected to take over in the last quarter of the year when Nhleko steps down in December. Jonas was the former South African Deputy Finance Minister. And Nhleko has been chairman and CEO of MTN Group for two decades and eight years respectively, before dropping the CEO portfolio after the appointment of Shuter in 2017.

MTN’s Reaction: In a statement seen by Nairametrics, the company urged the public to disregard the publication. According to MTN, Public Investment Corporation actually requested for Nhleko’s tenure to be extended more than his retirement period. MTN Group said the request was duly considered, even as a decision was reached to extend Nhleko’s tenure till December 2019.

“…contrary to what the story alleges, the PIC requested that the board consider extending Phuthuma Nhleko’s term longer than he had originally intended to remain Chairman. MTN Group applied its mind on the request, and considering other issues around the board evolution, asked Phuthuma Nhleko to stay until the 15 December 2019 to ensure an orderly handover to the Chairman designate, Mcebisi Jonas.”