Analysts question MTN leadership

While the appointment of former MTN Group CEO, Phuthuma Nhleko, as chairman of the mobile operator earlier this week has been widely approved by analysts, questions have been raised over potential leadership lines becoming blurred.

Spiwe Chireka, program manager of Telecoms at the IDC, told BusinessTech that, while Nhleko’s appointment is a positive one for the group – given his experience in building the company to its current size and market cap of R335 billion – it may well be difficult for him to avoid getting into the everyday operations of the group.

Nhleko stepped down as CEO of MTN Group at the end of March 2011, having been appointed in 2002, with Sifiso Dabengwa taking over his role.

“There is a possibility that the lines could become blurred between chairman and CEO,” Chireka said, noting that in many instances, chairmen are appointed with very little knowledge about the industry in which a particular company operates in.

“It might be difficult to for the chairman to decide where his role stops, and what the CEO does as he (Nhleko) has basically built the company up to what it is today. However, this move is more positive than it is negative.”

Nadim Mohamed, investment analyst and partner at First Avenue Investment Management, said that Nhleko is no stranger to being a board member only, since his resignation from MTN.

“Mr Nhleko is a good appointment and has extensive experience in telecoms within African and emerging markets. I think he will settle well into the chairman role as he has been on a few boards such as Anglo American over the past two years.”

Nhleko’s appointment as chairman of the company was confirmed at MTN’s annual general meeting on Tuesday (28 May), and follows the official resignation of Cyril Ramaphosa in March.

“It is the board´s belief that Mr Nhleko´s previous association with MTN and his experience in the telecommunications industry will benefit the group,” MTN said in a statement on Tuesday.

On Wednesday, MTN announced that it has appointed former chief financial officer, Zunaid Bulbulia as CEO for the group’s South African operations.

Bulbulia will replace former MD, Karel Pienaar, who will now function as the MTN Group chief strategy officer.

Shares in MTN Group moved 1.23% or R2.17 higher on the JSE Thursday, to R178.17.

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Analysts question MTN leadership