JOHANNESBURG (Reuters) - South African mobile phone operator MTN Group named the head of Vodafone Europe as its new CEO on Monday, bringing in an outsider with a risk-management background 10 days after it agreed to pay a $1.7 billion fine in Nigeria.
Rob Shuter, who also has a background in banking, replaces Sifiso Dabengwa who resigned last November after Nigeria imposed the penalty, the latest in a series of disputes exposing governance issues at Africa’s biggest mobile phone operator.
The fine, originally set at $5.2 billion but reduced in a settlement, was imposed after MTN failed to deactivate more than 5 million unregistered SIM cards. Nigerian authorities have been cracking down on unregistered cards, concerned they are being used for criminal activity in a country battling an insurgency by Islamist militant group Boko Haram.
“MTN has weathered a rather difficult storm and will continue to review its governance and management operating structure,” said MTN Executive Chairman Phuthuma Nhleko, backing the appointment of Shuter who will start by July 2017.
As well as leading MTN’s efforts to overhaul its governance standards, Shuter will also oversee the formulation of a new strategic growth plan. The firm is looking for new revenue streams as competition and regulation hits its profit margins.
Shuter, former head of investment banking at Standard Bank and managing director at Nedbank retail banking unit division, has been CEO of Vodafone Netherlands since 2012. In 2015, his role was expanded to include other European countries excluding the UK, Italy, Spain and Germany.
Analysts and investors welcomed the appointment of the South African national, saying his track record meant he could help MTN shake off the shackles of being regarded as a stock with limited growth outlook.
“It’s a strategically sound appointment because mobile phones are moving from being just a communication tool to distributing content and provide banking services,” said Momentum SP Reid analyst Sibonginkosi Nyanga.
Abax Investments, a Cape Town-based asset management firm that holds shares in MTN, also welcomed Shuter. Founding member and director Anthony Sedgwick said Shuter’s background and track record would be an important asset.
MTN also said it had appointed a new head of mergers, acquisitions and strategy to help look for new growth areas that include encouraging its more than 300 million users to use mobile phones for everything from storing money to paying bills.
The company did not name the executive but said he had a wealth of banking experience.
Founded with the government’s help after the end of apartheid in 1994, MTN was touted as one of South Africa’s biggest corporate success stories with operations in more than 20 countries in the Middle East and Africa.
But the company has been caught in the middle of disputes over its businesses in Iran, Syria and, most recently, Nigeria. It has also faced run-ins with authorities in other countries where it operates, including Uganda and Cameroon.
Nhleko, who was appointed interim executive chairman following Dabengwa’s resignation with an eye to renegotiating the fine in Nigeria, will revert to his role as non-executive chairman as soon as Shuter starts his new role.
Separately, Moody’s affirmed MTN’s Baa3 rating, saying the reduced Nigerian fine and payment terms were within the company’s west African country’s unit to pay off.
However, the rating agency maintained its negative outlook on the stock because MTN had been unable to repatriate dividends from Nigeria over the last six months.
Shares in MTN, which have fallen about a third over the past year, closed down 0.25 percent at 144 rand.
Editing by James Macharia, Sonya Hepinstall and Pravin Char