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What could MTN have done differently?

Nov 10 2015 14:44
Solly Moeng


Company Data

MTN GROUP LIMITED [JSE:MTN]

Last traded 55
Change 3
% Change 6
Cumulative volume 4704294
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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SOCIAL media discussions in South Africa, following the outbreak of MTN’s Nigeria-gate, have gone from blind patriotic defence of the South African cellular giant by some to suspicious attacks on Nigerian intent by others, with a few balanced views acknowledging the mistakes that were made by the cellular giant.

While some in the latter group thought MTN deserved the whopping $5.2bn fine, following its reported reckless corporate conduct in Nigeria, others felt the punishment meted out by the Nigerian Communication Commission (NCC) was too huge for the alleged crime.

An unfinished story

In the meantime, the Johannesburg Stock Exchange has still not announced the outcome of its reported investigation into possible insider trading at MTN [JSE:MTN] prior to the company announcing news of the Nigerian fine. Its probe was also intended to look into the reasons why MTN took its time before issuing the SENS announcement of its problems in Nigeria.

JSE regulations required the company to issue the announcement as soon as it was notified of the intended fine. It is now widely known that MTN’s refusal to obey the NCC’s directive to disconnect unregistered SIM cards was not the only problem it had faced in that country prior to the fine.

There had been a litany of other transgressions by the cellular giant, reportedly since 2011. MTN either never took the NCC with the seriousness it deserved, or poor leadership at Africa’s largest cellular giant simply failed to appreciate the corporate reputational risk their negligence placed the company in.

As a result, the executive directors failed in their fiduciary duties to protect corporate reputation and, by extension, safeguard shareholder interests.

Woefully inadequate communications

Throughout this process the standard of corporate communications at MTN has left much to be desired, right from the outset.

Whoever advises MTN on reputational matters should have foreseen the risks and ensured that appropriate steps were taken to avoid the mess the company now finds itself in. Assuming the advisers were also aware of the past and new charges before the rest of us and did nothing with that knowledge, it is time MTN sent them marching out the door right behind its disgraced CEO.

If not, what are they being paid for? MTN executive director for group communications Chris Maroleng can call it an “honourable departure” too, if he wishes.

The role of corporate reputation advisers is not to just sit there and wait before frantically running around drafting unhelpful media statements when the crisis is already outside their client's door.

In this era, when reputation can be measured in rands, dollars, goodwill and share value as we see in MTN’s case, corporate reputation advisers should act like sentinels, constantly observing and analysing their charges’ internal and external operational environment - corporate, socio-economic and political - for possible risks.

Like skilled chess players, they should have access to top company leadership, be informed upstream of planned strategic moves, establish and maintain a working relationship with the company’s legal advisers/division, and contribute advice on major strategic moves at that level.

Frantically running around with poorly written and often contradictory media statements when the horses have already bolted should be left to amateur spin doctors in the political arena where they belong.

Despite the much-publicised – and therefore already in the public domain - deadline of November 16 for paying the $5.2bn fine, Maroleng is reported to have denied being aware of it. He told City Press’ Xolani Mbanjwa that “the only deadline MTN was aware of was the payment of more than $94m (R1.3bn) [due to be paid] before December 31st for the (recently renewed) operating licence”. 

Really? He also told Radio 702 that while former CEO Sifiso Dabengwa took the step to resign as “an honourable” gesture, this did not mean that he was at fault for the unregistered SIM card debacle in Nigeria.

READ: MTN CEO resignation 'not an admission of guilt'

We all know that Dabengwa’s departure followed tremendous public pressure, with shareholders such as the PIC having begun to breathe heavily down his neck. He should have made it his business to know what was going on in their Nigerian business operations and there was therefore nothing voluntary or honourable about his departure.

If there were, his judgement is even poorer than meets the eye. Why voluntarily leave a company in the middle of a storm - and feed speculation - if you have absolutely nothing to do with the storm it is going through? Surely Maroleng’s communication advisers could have come up with a better response than this.

Lessons for MTN

If you want stakeholder goodwill, be honest and transparent right from the outset. Remember that big brother is everywhere and that whatever action is covered by the media elsewhere – even in Africa - will in no time make it into local media. Whatever your corporate values are, ensure that they’re fully communicated throughout your value chain and that adherence to them is mandatory.

Operate within the confines of the law and for pity's sake, shun any semblance of spin doctoring. Your seeming preference for a stakeholder engagement approach based on a very selective ‘need-to-know’ basis will do much harm to your corporate reputation if not dumped immediately.

Do not just say that you take your stakeholders seriously; show it!   

mtn  |  solly moeng  |  brand reputation
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