Public Investment Corp. (PIC), MTN’s largest shareholder, is reportedly pushing for the restructuring of the leadership of the mobile-phone company to avoid the regulatory, legal and political disputes on the continent.
The PIC built a 26 per cent stake in the Johannesburg-based company in late November and used the opportunity to call for the replacement of Phuthuma Nhleko, board Chairman, people familiar with the matter told Bloomberg, though this cannot be independently confirmed as at press time.
It was however gathered that Africa’s biggest fund manager, which is South African state-owned, also sent a letter to MTN demanding a board reorganisation, which resulted in the appointment of more politically-connected directors.
Last month, the network operator, announced Nhleko’s planned exit and replacement, along with other director changes and the introduction of a new separate group of prominent advisers.
The PIC didn’t respond to a request for comment. Nhleko declined to comment, Bloomberg said.
Interactions with the PIC have been at the board level, MTN Chief Executive Officer, Rob Shuter, said in an interview in London last week.
“An important thing for them was on our board evolution,” he said. MTN’s media office didn’t comment further.
The PIC was moved to act following a series of disputes in Nigeria, Iran, and Uganda, with the biggest fine of $5.2bn in Nigeria in October 2015, which was eventually settled for less than $1bn after negotiations and was completely paid off on May 24, 2019.
The PIC, which manages the pension funds of South African government workers, wants the new chairman, former South African Deputy Finance Minister, Mcebisi Jonas, and the board to resolve outstanding issues such as a $2bn tax dispute in Nigeria, the sources said. MTN’s separate advisory board is a council of “wise old men,” who can directly contact lawmakers and decision makers in the countries where MTN operates, one of the people said.
MTN Group had announced significant changes to its Board of Directors with the Emir of Kano, His Royal Highness Sanusi Lamido Sanusi, resuming on the board by July 1, 2019.
Another Nigerian, the former African Union Commissioner for Political Affairs, Dr Aisha Abdulahi, also made the board as a member of the International Advisory Board, whose operations will commence on July 1, 2019.
The group, in a statement issued by its Corporate Affairs unit, said the IAB would be chaired by a former President of South Africa, Thabo Mbeki. It added that the restructuring had become necessary in view of “recent challenging regulatory environments and competitive trading conditions.”
According to the statement, a Kenyan national, Vincent Rague, will join the board effective July 1, 2019.
Other changes that will be effected over the next 12 months, according to the telecom company, is the stepping down of Chairman of MTN Group, Phuthuma Nhleko, from his position on December 15, 2019, after ensuring a smooth transition of the Board and the establishment of the IAB.
It added that Mcebisi Jonas has been appointed Chairman-designate and would assume the position of Chairman of MTN Group effective December 15, 2019.
On the same day, MTN said Dr Khotso Mokhele would assume the responsibilities of Lead Independent Director while Alan Harper, Jeff Van Rooyen and Koosum Kaylan would step down from the Board after an orderly transition and handover to incoming directors.
The PIC “need us to manage portfolio risk,” Ralph Mupita, MTN’s Chief Financial Officer, said in the London interview.
“As a company, we operate in markets such as the Middle East and others, so how do we manage the risk that comes with sanctioned markets and other issues.”