MTN’s high-risk pioneering days are evidently over.
Last week the group’s outgoing chief executive, Rob Shuter, announced that a region that might have looked exciting and profitable about 15 or so years ago is now being abandoned — slowly. There was a time when the group’s Middle East expansion strategy seemed guided by US travel advisory warnings with any country on that list a prime target for MTN investment.
It has now put a “for sale” sign over its operations in Syria, Iran, Afghanistan and Yemen although Shuter has been at pains to stress this is no fire sale. First to go will be its 75 percent stake in MTN Syria in a divestment plan that is expected to take three to five years and generate around $1,4 billion.
How anyone thought that such a volatile region, even by South African standards, might generate enough profit to be worth the reputational risk remains a puzzle. The announcement comes as Africa’s biggest mobile phone group deals with embarrassing and potentially damaging allegations that it supported terrorism in Afghanistan. YeboYethu parts ways with PwC
On mobile phone matters, YeboYethu’s decision to give PwC the chop has come with a near-doubling of its audit fees to R1,1 million from R621 000 under E&Y.
The notes to the financial statements explain that part of the hike was due to an under-accrual in the previous financial year. During 2019 both Vodacom and its black economic partner YeboYethu dropped PwC after Vodacom’s UK parent Vodafone had decided to terminate the relationship because of a perceived conflict of interest.
Even allowing for the under-accrual it seems like a steep bill to audit a company that does nothing more than hold Vodacom shares and count dividend income.
It’s also difficult to understand why YeboYethu needs all of 10 directors to help it perform this function.
Shoprite joins African exodus
Another company reining in its foreign expansion plans is Shoprite, which last week announced it is pulling out of Nigeria.
It must have been an extremely difficult decision for chief executive Pieter Engelbrecht given that for years the most populous country in Africa had promised attractive growth prospects. But in recent years a weak oil price, currency devaluation and considerable uncertainty have made it all too difficult for a management team that has enough on its plate back home.
So after a 15-year foray Shoprite has joined Tiger Brands, Woolworths and Mr Price in what is surely a blow to hopes of an African market. Sadly, it was a difficult but appropriate decision.