MTN plans to announce its new CEO "soon", but for now interim executive chairman Phuthuma Nhleko will continue to lead the company, despite his intended six-month contract ending earlier this week.
Nhleko took temporary charge of the telecoms giant on 9 November 2015, to fill the shoes of CEO Sifiso Dabengwa, who resigned two weeks after MTN announced it faced a $5.2 billion (R78 billion) penalty in Nigeria.
Nhleko was supposed to only be in the role for six months, but MTN executive for group corporate affairs, Chris Maroleng, says he will stay on in the role until he has fulfilled his mandate.
"When he came into office, [Nhleko] was given a double mandate to recruit the new CEO and deal with the Nigeria matter. On both aspects of his mandate he has not indicated he has arrived at a conclusion. He has been constantly updating the board on his progress and we anticipate an announcement on both matters will be made soon," Maroleng told ITWeb.
The Nigeria matter has been a thorn in MTN's side since October last year, when it disclosed the hefty fine from the Nigerian Communication Commission for failing to meet a deadline to disconnect 5.1 million unregistered SIM cards in the West African nation. The fine was later reduced by 25% to $3.9 billion (R58 billion). Despite MTN paying $250 million (R3.7 billion) in February towards reaching a settlement with Nigerian officials, no settlement has yet been reached.
Strong for now
"Good leadership is vital in any organisation of any size, as it sets the tone and culture throughout the enterprise," according to ICT industry veteran Adrian Schofield.
He says that being without a CEO is not serious, as far as day-to-day operations are concerned, as long as the acting CEO is being effective; however, it "does cast a shadow over longer term strategy and planning".
BMI-TechKnowledge MD Denis Smit agrees strong leadership is important but also believes that with Nhleko and a strong executive leadership in place "there should not be a problem" for MTN in the short-term.
"An enterprise can exist without an effective CEO (as a country can exist without an effective president) but there is an enormous difference between mere existence and being successful," notes Schofield.
"Leadership of any community is vital for sustainability and growth. The CEO takes the policies and strategies of the board (on behalf of the shareholders) and drives the way in which the enterprise's resources are harnessed to achieve goals."
At MTN's annual results presentation in March, Nhleko was clear he had no ambitions to return as CEO permanently and that he was filling a temporary role at the company. Nhleko was previously MTN CEO for nine years before Dabengwa took over the role in 2011.
"We are looking in every nook and cranny where you can find a good CEO and the intention is that within the next two months or so we can come up with a name," Nhleko told journalists at a media briefing following MTN's results.
Smit says a company like MTN can manage without a permanent CEO if it has a strong board and executive team "but it's not ideal".
Another company in a similar situation is Neotel, which has been without a CEO since August last year. Sunil Joshi was placed on special leave while it conducted an investigation into alleged bribery and corruption in connection with a Transnet deal worth R1.8 billion. He then officially resigned in December 2015, despite the Neotel board finding nothing to implicate him personally in any bribery or corruption activities.
Non-executive director Kennedy Memani has been steering the Neotel ship in the absence of an official CEO.
Leading in crisis
Schofield says the strength of a company's leadership during a crisis is a double-edged sword.
"Strong leadership would have avoided the crisis in the first place. Taking over after the event does require even stronger leadership, providing the motivation and determination to recover from the setback and to restore the confidence of the shareholders, employees, regulators and customers," says Schofield.
Ovum senior analyst Richard Hurst agrees Nhleko "has been fulfilling this role more than adequately as he has done in the past".
"While some attention has been given to the need to fill the role of a permanent CEO, while the Nigerian fine crisis continues it may be more pertinent to maintain the current leadership to create stability both internally and externally," adds Hurst.
"Getting the right CEO may take some time. MTN faces a change in strategy and having the correct CEO to drive the vision and execute on it will take time," adds Smit.
Resolution nears
Maroleng implies that after over six months of negotiations, the Nigerian matter may soon be resolved. However, Schofield warns observers should not push for a speedy resolution because these type of negotiations take time and patience.
"I am sure the management of MTN in Nigeria and at group level are doing all they can to resolve the matter to the satisfaction of the Nigerian authorities, while minimising the financial impact on the company."
Hurst says the number one objective of the leadership is probably to diminish the impact of the fine; and number two would be to get the matter resolved as soon as possible. However, he points out MTN is dealing with government departments and potential legal matters, "which tend to move at a slower pace".
"The fine represents a significant blow to potential revenues and will impact cash flows negatively, which in turn will draw negative sentiment from investors, as it has already.
"The leadership will need to demonstrate they are able to deal with the matter in a quick and effective manner that will limit the impact of such an event on their revenues. The leadership will need to restore confidence in the business, demonstrate they can get these setbacks behind them and carry on with running the company," adds Hurst.
MTN's share price has dropped over 30% since the fine was announced and 38% in the past year. The group has a total of 229 million subscribers across 22 operations in Africa and the Middle East.
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