News / National
Revolt at MTN over CEO's 'female favourite'
01 Sep 2024 at 11:58hrs | Views
An ugly battle is brewing at MTN over the direction Africa's biggest mobile network operator is taking under group CEO Ralph Mupita, with executives threatening to quit en masse over his leadership style amid allegations of a lack of accountability and favouritism.
At the heart of the issue is Mupita's close relationship with a top female group executive - others in the C-suite complain that he has improperly tried to divest them of their executive responsibilities and hand them over to her.
Multiple sources, internal and external, have confirmed that the relationship between Mupita and the woman, whose name is known to the Sunday Times, was of such concern that it was discussed at a group board meeting held in China this year.
It is also at the centre of an anonymous complaint laid by a whistleblower, which has prompted the board to appoint a law firm to investigate this and other allegations, including that a culture of fear permeates the company.
The ructions come amid a disastrous financial performance by the group, with profit plunging 80% in financial 2023 and a reported loss of almost R10bn in the half-year to June.
In response to detailed questions, MTN said: "The group board has initiated a verification exercise in response to complaints received against certain senior executives. Once the process is concluded the board will deliberate."
Senior leaders at MTN who spoke on condition of anonymity alleged attempts had been made to transfer some of the responsibilities of Charles Molapisi, CEO for South Africa, to the woman executive. They said the head of legal affairs had fought attempts to report directly to the woman.
They said the executive committee was divided and some executives were strongly pushing back against Mupita.
"There is a culture that is causing underperformance," said one former MTN executive. "There is leadership infighting and the group executive committee has been weakened. Two to three outliers are strongly pushing back against [Mupita] but others are scared to do so for fear of being sidelined."
There is apparently pressure from the board on Mupita, who has a year left on his contract, with one senior manager alluding to "cause for concern to the business as the female executive now has a powerful voice in the business".
Another source said: "The entire culture has collapsed across the group. In turn the group CEO is accusing some of the executives of plotting to oust him." Mupita was on "borrowed time", this source said, especially given the poor financial performance of the group.
When the Sunday Times sought to obtain comment from Mupita yesterday, Nompilo Morafo, the group chief sustainability and corporate affairs officer, said the CEO was travelling from Asia and he would be able to respond "by Monday morning". She referred the newspaper to the board, which was handling the matter.
The board said: "MTN is not in search of a group CEO as the current contract remains in effect."
The board is said to be reluctant to initiate conversations around the possible renewal of his contract. A meeting of its nomination committee, at which the issue was due to be raised, has been postponed for three months. It is not clear if this was meant to give the board time to finalise its investigations into the complaints against Mupita.
Some of the sources said there was such value destruction of the company that four significant investors had started to work together to oust the group CEO. Another alleged some of the big investors were also gunning for board chair Mcebisi Jonas, but this could not be independently verified.
Mupita joined MTN in April 2017 as CFO and became CEO in September 2020.
The company's underperformance has repeatedly been raised as the main reason some investors are gunning for Mupita.
In comments accompanying the woeful first-half results, MTN said earnings had been hit by the plunge in value of the Nigerian naira and the war in Sudan.
But one insider said the business's problems were fundamental and long-standing, and blaming the currency devaluation was "a sideshow".
In a media briefing following the release of the results, Mupita said the underlying business was performing well despite the currency headwinds that hit the business, which were beyond the control of management.
The balance sheet was in much better position than in the past, he said. When he joined the group, 80% of the debt was dollar denominated and now it was 22%. "So we degeared and derisked the company very significantly to be able to withstand the shocks. If the balance sheet looked like it was, then we'll be having a different story," he said.
He said the group was going through a cycle and the investment case remained strong.
At the same media briefing, group CFO Tsholo Molefe said MTN tried to manage currency risk by localising as much as possible.
"In Nigeria it's difficult for hedging strategy. The only hedging I can do is try and localise as much as possible. But a lot of material that we get is actually denominated in dollars."
Another source said the board was concerned about the amount of time it takes to implement strategies. Four years ago, MTN unveiled its ambition 2025 strategy that included selling minority stakes in its fintech business, selling shares to locals in some markets, growing fintech subscribers to 100-million across all markets and attracting 10-million fibre customers. Some of the targets, including exiting Afghanistan, have been achieved, but others such as the fibre-subscriber number will likely be missed.
"Take the Mastercard card partnership; the discussions took around 18 months or so and ... it's almost two years now the rollout of the partnership is slowly starting," an insider said.
At the half-year results presentation, MTN said it was "making good progress in the commercial rollout of our card issuance and acceptance in line with our partnership with Mastercard. We are prioritising seven markets in our card issuance road map and four markets for card acceptance during 2024."
It is not clear when the board investigation will be completed.
At the heart of the issue is Mupita's close relationship with a top female group executive - others in the C-suite complain that he has improperly tried to divest them of their executive responsibilities and hand them over to her.
Multiple sources, internal and external, have confirmed that the relationship between Mupita and the woman, whose name is known to the Sunday Times, was of such concern that it was discussed at a group board meeting held in China this year.
It is also at the centre of an anonymous complaint laid by a whistleblower, which has prompted the board to appoint a law firm to investigate this and other allegations, including that a culture of fear permeates the company.
The ructions come amid a disastrous financial performance by the group, with profit plunging 80% in financial 2023 and a reported loss of almost R10bn in the half-year to June.
In response to detailed questions, MTN said: "The group board has initiated a verification exercise in response to complaints received against certain senior executives. Once the process is concluded the board will deliberate."
Senior leaders at MTN who spoke on condition of anonymity alleged attempts had been made to transfer some of the responsibilities of Charles Molapisi, CEO for South Africa, to the woman executive. They said the head of legal affairs had fought attempts to report directly to the woman.
They said the executive committee was divided and some executives were strongly pushing back against Mupita.
"There is a culture that is causing underperformance," said one former MTN executive. "There is leadership infighting and the group executive committee has been weakened. Two to three outliers are strongly pushing back against [Mupita] but others are scared to do so for fear of being sidelined."
There is apparently pressure from the board on Mupita, who has a year left on his contract, with one senior manager alluding to "cause for concern to the business as the female executive now has a powerful voice in the business".
Another source said: "The entire culture has collapsed across the group. In turn the group CEO is accusing some of the executives of plotting to oust him." Mupita was on "borrowed time", this source said, especially given the poor financial performance of the group.
When the Sunday Times sought to obtain comment from Mupita yesterday, Nompilo Morafo, the group chief sustainability and corporate affairs officer, said the CEO was travelling from Asia and he would be able to respond "by Monday morning". She referred the newspaper to the board, which was handling the matter.
The board said: "MTN is not in search of a group CEO as the current contract remains in effect."
The board is said to be reluctant to initiate conversations around the possible renewal of his contract. A meeting of its nomination committee, at which the issue was due to be raised, has been postponed for three months. It is not clear if this was meant to give the board time to finalise its investigations into the complaints against Mupita.
Mupita joined MTN in April 2017 as CFO and became CEO in September 2020.
The company's underperformance has repeatedly been raised as the main reason some investors are gunning for Mupita.
In comments accompanying the woeful first-half results, MTN said earnings had been hit by the plunge in value of the Nigerian naira and the war in Sudan.
But one insider said the business's problems were fundamental and long-standing, and blaming the currency devaluation was "a sideshow".
In a media briefing following the release of the results, Mupita said the underlying business was performing well despite the currency headwinds that hit the business, which were beyond the control of management.
The balance sheet was in much better position than in the past, he said. When he joined the group, 80% of the debt was dollar denominated and now it was 22%. "So we degeared and derisked the company very significantly to be able to withstand the shocks. If the balance sheet looked like it was, then we'll be having a different story," he said.
He said the group was going through a cycle and the investment case remained strong.
At the same media briefing, group CFO Tsholo Molefe said MTN tried to manage currency risk by localising as much as possible.
"In Nigeria it's difficult for hedging strategy. The only hedging I can do is try and localise as much as possible. But a lot of material that we get is actually denominated in dollars."
Another source said the board was concerned about the amount of time it takes to implement strategies. Four years ago, MTN unveiled its ambition 2025 strategy that included selling minority stakes in its fintech business, selling shares to locals in some markets, growing fintech subscribers to 100-million across all markets and attracting 10-million fibre customers. Some of the targets, including exiting Afghanistan, have been achieved, but others such as the fibre-subscriber number will likely be missed.
"Take the Mastercard card partnership; the discussions took around 18 months or so and ... it's almost two years now the rollout of the partnership is slowly starting," an insider said.
At the half-year results presentation, MTN said it was "making good progress in the commercial rollout of our card issuance and acceptance in line with our partnership with Mastercard. We are prioritising seven markets in our card issuance road map and four markets for card acceptance during 2024."
It is not clear when the board investigation will be completed.
Source - sundaytimes
