Stormy session at MTN AGM; shareholders unleash questions on company strategies and future plans

Posted by News Express | 26 May 2016 | 2,589 times

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MTN faced a barrage of questions from shareholders over its succession planning, risk and compliance systems, and a payout to former CEO Sifiso Dabengwa at its annual general meeting on Wednesday.

The group was criticised for chairman Phuthuma Nhleko becoming executive chair when Dabengwa quit in November last year in the wake of a crisis caused by a $5.2bn fine from the Nigerian authorities.

The fine has since been cut to $3.9bn and was a penalty for not disconnecting 5.1-million subscribers, prompting questions on Wednesday about its risk and compliance systems.

Eskom Pension and Provident Fund CEO Sbu Luthuli said MTN must assure shareholders that it had developed risk management practices to ensure there was proper oversight and to prevent actions such as those in Nigeria.

Nhleko admitted that the company could have handled the Nigeria matter differently but said it was beefing up its regulatory compliance.

Talks with Nigerian authorities were continuing. It was likely to review the “adequacy of the provision” of $620m it had made for the fine.

Dabengwa’s R40.6m payout was 76% restraint of trade, and 24% in salaries and others. Nhleko said MTN had to honour contractual obligations, and it would not have been in shareholders’ interest for Dabengwa to be available to rivals immediately.

A CEO would be appointed by the end of June, said Nhleko, adding that the company did have a succession plan but it could not be implemented during the “sudden shake-up” caused by the fine and Dabengwa’s resignation.

Some shareholders want an outsider to run the company.

MTN also warned that its performance for the remainder of the year would be affected by greater competition and the weak macro environment in key markets.

By the end of April MTN had increased its subscriber base 1% to 230.3-million, compared to the first four months of last year.

The 7% decline in subscribers in Nigeria and an 11% drop in Uganda, mainly as a result of subscriber deregistration, had dragged it down.

•Text courtesy of BusinessDAY South Africa. Photo shows MTN Chairman Phuthuma Nhleko.

Source: News Express

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