MTN hits back at Black Management Forum about its white CEO

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Mobile operator MTN has hit back at claims by the Black Management Forum, that its new CEO should have been black, in keeping with the spirit of transformation.

“Transformation is a broad process with many facets and not a single position or specific individual at a particular point and time, but a journey,” the company said in a statement on Friday (24 June 2016).

MTN on Monday announced to shareholders that its board had moved to appoint Rob Shuter as its new chief executive officer.

Shuter, who is currently the CEO of Vodafone Group’s European Cluster, is expected to take MTN’s top job in 2017. He has previously held senior positions at Vodacom, Nedbank and Standard Bank.

MTN’s appointment of Shuter comes after its previous CEO Sifiso Dabengwa quit late last year amid a multi-billion dollar telecoms fine in Nigeria.

BMF – which advocates black leadership among local businesses – said that the hiring of Shuter is “disheartening” as it signals a lack of transformation in corporate South Africa.

“The BMF’s position is informed by the clear reversal of black representation in top JSE listed companies. There is a general unwillingness for transformation at top management level which has resulted in the decline in the number of black South African CEOs” said BMF President Mncane Mthunzi in a statement this week.

“MTN may put forward reasons it argues to be valid for the appointment of its new CEO, however, the company would undoubtedly agree that it has squandered a good opportunity to reaffirm its commitment to transformation. Prior to this appointment, MTN had demonstrated exemplary leadership by successively having black CEOs,” Mthunzi added.

MTN said that transformation and empowerment remain at the core of its ethos and culture. The company moved to underline its empowerment related targets and achievements.

MTN released the following statement:

MTN Group’s growth into a leading multinational telecommunications company has in itself been a story of shared growth within the economies we operate. From humble beginnings, as a local and regional company, MTN has propelled itself into an operation spanning 22 countries in Africa and the Middle East, with a diverse aggregate population of over 600 million under its footprint. Through our operations in countries as diverse as Nigeria, Cameroon, Uganda, Syria, Iran, Afghanistan and indeed South Africa, the Group supports a subscriber base of over 230 million.

This is serviced by a staff complement of approximately 21 000, which represents almost 60 different nationalities. South African staff comprise 22% of the total group staff complement, of which 85% of the South African staff are Historically Disadvantaged South Africans (HDSA).

Transformation and empowerment remain at the core of MTN’s ethos and culture. Over the last 22 years, MTN has been one of the standard bearers of BEE and overall transformation amongst the top 10 JSE-listed companies. Outside of senior HDSA appointments, MTN enabled its staff to benefit from the growth and success of the business through a non-company and industry leading financed management “buy in” in 2006. This saw an allocation to staff members and created an owner managed black business cadre, 72% of which were HDSA.

To further entrench empowerment into the business, a public scheme, MTN Zakhele, was launched in 2011; 124 000 HDSA shareholders were eligible to invest. On average, MTN Zakhele has been highly successful, with shareholders benefitting from a compound annual return of 29% since the Scheme’s launch in 2010. Further, over a period of 15 years, MTN Group shareholders have enjoyed one of the highest compound annual returns of the JSE, before and after the Nigeria fine of 18.4% and 17.5% respectively.

Diversity is our key differentiator and is fundamental to our success. Consequently, our employee base has a strong bias toward local talent as evidenced in MTN South Africa where the CEO, board and executive committee are comprised of predominantly HDSA persons. In addition, of the 22 CEOs across our operations, 9 are South African, five of whom are HDSA. MTN is a magnet for young professional talent in all its markets. All positions in the Group are filled on the basis of the company’s needs and objectives without compromising the medium-term transformation imperative in South Africa or any of our operational markets.

In the recent past, the Group has faced a number of challenges, including very tough economic conditions across our key markets, increased competition and heightened regulatory pressure, particularly around subscriber registration requirements. These come at a time when MTN is repositioning its business to ensure long-term sustainability as it aims to lead the delivery of a bold new digital world.

Whilst transformation will always be important, innovation and strategic flexibility are equally critical given the global nature of the firm and the disruptive technological changes that are sweeping through the telecoms sector. To this end, the market has understood the changes made to the organisational structure as well as the appointment of key roles to address identified strategic gaps within the business. This includes the appointment of an internationally-seasoned Group CEO and President, who was chosen following an extensive global and local search. Ongoing empowerment and transformation will remain one of the key deliverables of the new Group CEO.

Notwithstanding significant efforts made in the spirit of transformation in South Africa, the Group remains sensitive to the diverse nature of its shareholding structure – 55% global funds and 45% domestic shareholders – and operations in order to achieve its long-term vision and objectives. The Group is proud of its transformation policy, record and trajectory, which, whilst varying in its depth from time to time, is informed by an emerging market vision and objective. Transformation is a broad process with many facets and not a single position or specific individual at a particular point and time, but a journey.

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