Africa's largest cellular company, MTN, has not provided any indication of who will lead the company when CEO Phuthuma Nhleko leaves next year.
Analysts say this question must be answered soon.
Nhleko yesterday presided over what could be his last set of annual results at the company, but shrugged off a question as to where the appointment process was, suggesting the shareholder have “tea” with chairman Cyril Ramaphosa.
He did, however, indicate the board is looking internally and externally, and is casting a wide net, which is a standard board process. “I'm sure they will embark on that soon.”
At the beginning of this month, MTN said Nhleko will step down by March next year, but will be available to the board after leaving. He has also agreed to stay on until March, at the latest, to facilitate the handover process, despite his contract expiring in mid-year.
Vital question
Chris Gilmour, Absa Investments analyst, says he expects MTN to shed some light on who will take up the top spot within the next three months.
“We are starting to wonder where is the next big move... questions are starting to be asked about what will happen with MTN. Will it just be a cash cow, or will it have a new strategic direction? That will be answered largely through the appointment of a new CEO.”
Gilmour adds that the company is at a crossroads and may need new blood to move forward.
He doubts MTN has identified a new leader yet, and says the company will find it difficult to source the sort of talent it needs as “SA probably has the worst skills shortage in the world”.
Stephen Meintjies, an analyst at Imara SP Reid, says he expects MTN to appoint someone by September at the latest. “If they have not appointed someone by the end of September, it could be a bit of an issue.”
Meintjies adds that Nhleko will have to hand over the company to the new appointment for at least six months.
Work to do
Nhleko, who has been with the company since mid-2002, would have done a few things differently, he says. And, he is likely to leave a few things undone when he moves on. “Nobody can ever do everything.”
A constant challenge is to reduce the company's cost base, he says, which is something he will continue working on.
Looking back on his time at MTN, he seems to regret having lost a bidding war to buy out Africa's third-ranked player Celtel, in 2005, after Kuwait's MTC put in a higher offer. MTN put in a $2.7 billion offer, but was trumped by MTC's $3.3 billion bid.
The bidding war eventually landed up in court, because MTN had secured backing from 70% of Celtel's shareholders, and wanted Celtel to provide it with documentation to prove the MTC deal was done fair and square.
“If we had bought Celtel in 2005, we would be a larger company today,” says Nhleko. However, MTN is still a sizeable organisation to run, as it has 116 million subscribers in 21 operations in Africa and the Middle East.
Since Nhleko's appointment in July 2002, it has grown from turning over R19 billion to boasting revenue of R111.9 billion in the year to December. It has a market capitalisation of R212.6 billion.
He says he would also have walked down the aisle with Bharti Airtel twice, even though the marriage ceremony never took place. Nhleko adds that he would have tried to keep tighter control on the speculation about the deal.
Rumours around the deal were rife and spread quickly, which Nhleko attributes to “life in a connected world”. However, he says, as a listed company, it is difficult to balance what information can be given out and what information must remain secret.
No idea
Nhleko has not decided what to do next, saying he has a whole year in which to think about it and will probably decide towards the end of the time he has left with the company.
He adds that he is unlikely to take up the role of chairman at the Independent Communications Authority of SA. “I think Paris [Mashile] had a much more difficult job than mine.”
Ramaphosa indicated in the initial announcement about Mhleko's departure that the CEO may stay on with the company. “We have mutually agreed to explore other options for an ongoing association between Phuthuma [Nhleko] and the group post his service as president and CEO.”
Meanwhile, Business Report says COO Sifiso Dabengwa may be leaving MTN to take over the top post at Eskom, after Jacob Maroga's resignation.
This would make him the third senior executive to quit the cellular giant within a year, after CFO Rob Nisbet relinquished his board position at the end of September to be replaced by Nazir Patel.
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