Battle lines have been drawn within MTN over alleged favouritism by Group CEO Ralph Mupita towards another executive, Sunday Times reports.
The report, citing multiple anonymous sources inside the company, said Mupita tried to transfer some functions that fall under MTN SA CEO Charles Molapisi to an unnamed female executive, whom he favours.
Concerns over Mupita’s relationship with the female executive were reportedly the subject of an anonymous whistleblower complaint discussed at a group board meeting earlier this year.
The complaint also stated that a culture of fear permeates the company.
Amid these allegations, executives have threatened to quit en masse over Mupita’s leadership style. It is worthy of note that MTN Group executives include two Ghanaians, Ebenezer Asante, Senior Vice President, Markets, and Selorm Adadevoh, Group Chief Commercial Officer.
The report quoted one source as saying that MTN’s entire culture has collapsed, with Mupita accusing some executives of plotting to oust him.
This latest report of leadership turmoil comes after an executive exodus at MTN South Africa, beginning with former MTN SA CEO Godfrey Motsa’s unexpected resignation in December 2021. Charles Molapisi replaced Motsa.
The announcement of Motsa’s resignation was soon followed by those of former MTN SA CTO Giovanni Chiarelli and Supersonic CEO Calvin Collett.
At the time, MTN assured there wasn’t a leadership exodus at the company.
Former MTN SA chief strategy officer Marco Gagiano and chief sales and regional operations officer Phillip Besiimire also left the company towards the end of 2022.
Besiimire left in September — a few months before Motsa.
Collet’s replacement, Megan Nicholas, left MTN in April 2023.
MTN SA’s chief financial services officer, Felix Kamenga, also left the company in May 2023. He was replaced by Bradwin Roper, who resigned a year later.
In August 2023, Chiarelli’s replacement, chief technology and information officer Michele Gamberini, also quit the company.
This year, MTN SA’s chief sustainability and corporate affairs officer, Jacqui O’Sullivan, resigned in February.
Roper resigned a few months ago and is scheduled to leave the company in October.
According to the Sunday Times report, sources said four big investors had started to work together to remove Mupita as Group CEO because of the value destruction at the company.
This is in spite of the fact that recent Daily Investor analysis showed that MTN’s share price performed well under Mupita compared to his peers at other listed South African telecoms companies.
The analysis looked at companies’ share price performance from when their current CEOs took their respective reins.
By annualised returns, Mupita was the clear winner among South Africa’s four largest telecoms. MTN achieved an annualised return of over 11% during his four-year tenure.
However, the comparison noted that Mupita has a clear advantage — he took the helm after global markets were hammered because of the Covid-19 pandemic. Therefore, he started when the share price was on the rise.
It also noted that this year, under Mupita’s custodianship, MTN recorded its first loss in eight years.
Still, MTN’s share price climbed during Mupita’s first 18 months at the company.
After that, it started taking a beating due to regulatory and foreign currency headwinds in its biggest market — Nigeria.
Nigeria’s decision last year to de-peg its currency from the US dollar significantly impacted MTN’s rand-based earnings and, as a result, its share price.
Until June 2023, Nigeria had kept the Naira’s exchange rate to the US dollar artificially pegged to a specific value.
This created a liquidity problem for those wishing to sell nairas, including MTN.
A black market emerged to alleviate the liquidity crunch. This allowed people to exchange their nairas for dollars more readily — but at a much lower rate.
However, this option is not available to legitimate businesses, which had no choice but to sell nairas through the central bank.
Of course, investors know the black market rate, further lowering investor confidence in the currency.
While the Nigerian government officially lifted the naira-dollar peg in June 2023, multinational corporations still had to use the official exchange rate.
Authorities more regularly revalued the Naira to match movements in the open market, but companies like MTN were still forced to trade at a disadvantage.
MTN became a victim of this rapid currency devaluation and poor liquidity, with its headline earnings taking a massive hit.
The collapse of the Nigerian naira at the start of the year hit MTN’s share price hard, and the pain has continued since.
FNB Wealth and Investments portfolio manager Wayne McCurrie said the situation in Nigeria creates massive uncertainty for MTN.
He said there was no way for investors to know whether the Nigerian government would come up with another fine to slap MTN with, or what the naira was going to do.
McCurrie explained that MTN can only borrow in dollars, because there is no market in local African currencies for the kinds of sums it needs.
“So you borrow in dollars, your capital expenditure (capex) is in dollars, and then you earn in a massively depreciating currency to repay all those loans you took out to buy the capex — and the capex is huge,” he said.
“Unless things truly come right in Nigeria and the country’s managed properly and the forex is managed properly and/or the oil price goes to $120, I wouldn’t buy MTN.”
Old Mutual Wealth Private Clients research head Victor Mupunga provided an alternative view more recently, arguing that MTN provides a compelling investment opportunity at its current valuation.
Mupunga said MTN is positioned to benefit from increased economic growth across Africa, has a strong balance sheet, and plans to reduce its sensitivity to foreign exchange rates.
Techfocus24 contacted an MTN Group Executive for comments regarding the alleged executive turmoil at the company, but he did not provide feedback.
