The South African telecom firm plans to refocus on Africa and mobile money
| THE INDEPENDENT | MTN Group’s new CEO Ralph Mupita is expected to manage by capitalising on technological growth and demographic dividends within Africa to cement its position as the continent’s largest telecom services provider.
He comes on the front amidst years of legal difficulties in some of the group’s markets.
The firm’s Middle East operations have underperformed in recent years, while legal and regulatory difficulties in Nigeria damaged shareholder confidence in its expansion strategy.
Former CEO Rob Shuter – who will become CEO of BT’s Enterprise unit – had to deal with a record $5.2bn fine, later reduced to $1.5bn, levied by Nigeria’s Communications Commission after failing to disconnect 5.1m unregistered simcards, while grappling with the Nigerian government over an additional $2bn tax claim, which was finally dropped earlier this year.
In Uganda, MTN has faced numerous challenges including constant hacking of its mobile money platforms, with the latest incidence reported on Oct.03, 2020.
MTN and its closest challenger, Airtel Uganda and Stanbic Bank Uganda said in joint statement on Oct. 06, that their third-party service provider experienced a system incident which impacted Bank to Mobile Money transactions.
The entities did not disclose the third party in this scam. They also never shared the amount of money lost in the process. None of their customers reported loss of funds on their accounts at least by press time.
Now it falls to MTN’s new CEO, Zimbabwean Ralph Mupita, to extricate MTN from the Middle East, grow its mobile money platform with a strong anti-cyber security measures, and invest in 5G.
“He has financial experience in the banking sector and this is becoming increasingly important if not critical for MTN because of the growing size of mobile money,” says Dobek Pater of research consultancy Africa Analysis.
“Mobile operators are the biggest threat to traditional banks, and Mupita knows the changes that need to be made to steer MTN forward in that industry,” Pater added.
Mupita is an internal appointment, having joined MTN in 2017 as group chief financial officer, after a 16-year career at Old Mutual, including a five-year stint as CEO at Old Mutual Emerging Markets. He has less telecommunication experience compared with his peers. But he beats them with a wealth of financial experience.
An engineer and an alumnus of the Harvard Business School, Mupita has been a key player driving MTN’s BRIGHT strategy, a five-year plan to reach 300m subscribers by 2022, and bolster new revenue streams in financial services, mobile gaming and music streaming, to offset the falling margins in bread-and-butter telecom services such as phone calls.
“Ralph’s experience as the group CFO, strong knowledge of our businesses and markets, as well as successful background in financial services and more place him in an excellent position to lead the growth and sustainability of the business going forward,” said a statement from the firm.
Although MTN has emerged from the worst of its labyrinthine legal problems in Nigeria, its exposure in risky markets like Iran, Afghanistan and Syria, and investment in non-core businesses like Jumia and IHS, contributed towards a share price plunge of more than 50% during Shuter’s tenure.
However, analysts say the corporate culture has improved in recent years. MTN took a leading role in financially supporting employees during lockdown and launched a coronavirus education campaign.
“There’s no longer a cowboy-type culture, and with that you have less legal issues,” says Michael Treherne, portfolio manager at Vestact Asset Management. “MTN’s biggest problem is that currently their share price largely tracks oil, and they have been exposed in very oil-dependent economies.
MTN’s other problem is that it costs a huge amount of money to maintain its network, and 5G is now about to roll out. That’s going to cost them billions, so some shareholders are thinking, ‘you’re going to need a lot of money to do these short-term investments in infrastructure, but will it be worth it long-term?’
South African telecoms regulator ICASA is preparing to issue an invitation for firms to apply for high-demand spectrum and its Wireless Open Access Network (WOAN). Competitors MTN, Vodacom and Rain started rolling out 5G networks in major South African cities this year, using temporary spectrum allocated by the regulator to support communications during lockdown. ICASA will hold auctions to issue permanent high-demand spectrum licences by December, and MTN is interested in a permanent contract to grow its broadband offering.
Despite MTN’s share price challenges, the company has grown to 262m subscribers in more than 20 countries since it was founded in 1994, adding 11m in the first six months of this year. Covid-19 lockdowns improved the appetite for increased data within African markets, with MTN South Africa’s data traffic up 77% and an increase of 14.1% in active subscribers to 14.2m in the country, according to Shuter.