MTN says it was not forced to make board changes

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Outgoing MTN Group chairman Phuthuma Nhleko.
Outgoing MTN Group chairman Phuthuma Nhleko.

Mobile network operator MTN has refuted media reports that insinuated it was arm-twisted into making board changes by its majority shareholder, the Public Investment Corporation (PIC), last month.

Earlier this week, Bloomberg reported that MTN’s biggest shareholder is pushing for changes at Africa’s largest mobile-phone company to avoid the regulatory, legal and political disputes that have cut its share price by more than half over the past four years.

The report was shared widely by other publications.

As of November last year, the PIC, Africa’s largest asset manager, held a 26% shareholding in MTN.

Last month, the mobile operator announced significant changes to the group’s board and the establishment of an international advisory board (IAB), led by former South African president Thabo Mbeki.

The company said Phuthuma Nhleko, chairman of MTN Group, who was anticipated to step down from his position at the annual general meeting (AGM) that was set for 23 May, will step down from the board on 15 December after overseeing an orderly transition of the board, including the establishment of the IAB.

Former deputy finance minister Mcebisi Jonas was appointed chairman-designate and will assume the position of chairman of MTN Group, effective 15 December.

Responding to the media reports, MTN says it noted recent media stories, based on a Bloomberg report, which carry unsubstantiated rumours and inaccuracies that the PIC is pushing for changes to the board of MTN.

“MTN regularly engages with its shareholders where we have robust, constructive, open and transparent discussions about the business. A key part of that engagement is the governance roadshow with investors that, over the last two years, has been held ahead of the AGM. During these roadshows, MTN Group engages with the PIC and other major investors on matters of governance, strategy and financial performance,” the operator says.

With regard to the Bloomberg report concerning MTN chairman Nhleko, the operator says contrary to what the story alleges, the PIC requested that the board consider extending 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 15 December 2019 to ensure an orderly hand-over to the chairman designate, Mcebisi Jonas.”

It adds the MTN board evolution and the setting up of the IAB were communicated to shareholders and broader stakeholders on 3 May, following a proposal by the nominations committee of the board and approved by the board as standard good governance.

According to the operator, these changes were discussed with major shareholders during this year’s governance roadshow ahead of the 2019 AGM, with the PIC supportive of the changes.

“Similarly, the primary purpose of the IAB is to provide general global and/or sector-specific perspectives that may enrich the perspectives of the operating company’s board as it strives to contribute to certain areas of development in the countries in which it operates.

“The construct of an IAB is one that is adopted by a number of global multinationals that operate in varied and multiple jurisdictions across the world. While this is not prevalent in South African domiciled companies, such boards advise a number of global companies quoted on major global bourses. The IAB was conceptualised by the MTN board before the PIC increased its shareholding in MTN,” the company says.

“MTN Group remains appreciative of the support it has always had from the PIC as a major and long-standing shareholder of the business,” it concludes.

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