This set of circumstances was reflected in the group’s share price, which saw the company lose 50% of its market capitalisation between 2015 and 2016. The share has clawed back some ground, and was hovering at R123.56 at the time of writing.
Reflecting on events at the recent results presentation, acting executive chairman Phuthuma Nhleko [who stepped out of the executive role with the arrival of CEO Rob Shuter in March] said 2016 had been a “very difficult year”, adding that the Nigeria fine had become a “seminal event” in MTN’s history.
The fine triggered the resignation of former CEO Sifiso Dabengwa, who fell on his sword in November 2015. What followed subsequently must count as one of the most significant re-examinations of a company by a board in recent history.
Nhleko, who was CEO between 2001 and 2011, stepped back into the hot-seat at the request of the board and initiated urgent steps to stabilise the business and undertake a strategic review of MTN’s operations and processes.
It emerged that the quality of management was sliding, risk management was dire, investment in network infrastructure was behind the curve and the company was not equipped to navigate a rapidly-evolving digital environment.
In March 2017, MTN delivered its worst results in the company’s 22-year history, with revenue flat and earnings and margins down. However, there was a thin silver lining as results from the second half of the year gave an indication that performance had stablised.
“The results were a function of very tough economic conditions in most of their markets with execution errors adding to the weaker results,” says Peter Takaendesa, a portfolio manager with Mergence Investment Management. “However the second half showed better trends in terms of execution compared to the first half.”
