Analysing MTN’s CEO shuffle

This week’s announcement by MTN Group that Ahmad Farroukh would be replacing Zunaid Bulbulia as CEO of MTN South Africa with immediate effect raised a number of questions. Zunaid Bulbulia will be moving into the position of group chief operating officer after only a year of serving as CEO. To get more insight into the shuffle and what it could mean in light of its immediate nature with little explanation from MTN, is Nadim Mohamed from First Avenue, he joined Alec on CNBC Africa to analyse the move. – LF

ALEC HOGG:  MTN South African Chief Executive, Zunaid Bulbulia, has been replaced by Ahmad Farroukh and that’s happened with immediate effect.  Nadim Mohamed from First Avenue is our go-to man on matters of telecoms.  He’s on the line just to give us some insight.  Immediate effect:  Nadim, usually that means something strange has happened.  Do you think there are developments behind the scenes here?

NADIM MOHAMED:  Good day Alec, and thanks for having me on the show.  MTN didn’t give any reasons besides saying that it was part of their strategy to regularly rotate key talent across the organisations, but Zunaid’s term as CEO of South Africa was too short for it to be a typical rotation.  I think it started in May last year, so he’s been in the job for just over a year.  You’ve seen MTN growth grossly underperform Vodacom over this period.  It would appear that not only has MTN underperformed, but also the level of underperformance has been accelerating.  If you look at just the last two quarters, Vodacom eked out a small gain in revenue, whereas it looks as if MTN’s had something to the tune of a six percent decline.  We’ll see next week exactly how big that decline is in South Africa.

ALEC HOGG:  Wow, so somebody’s had a look at those numbers – someone on the board – and has said ‘we need to shake things up a little’.

NADIM MOHAMED:  I think so.  Initially, when Cell C started with the price competition, MTN tried to look the other way and not react.  That was the first mistake.  Vodacom was smart in that they tried to give more value to the customers while still managing their elasticity and keeping at similar levels.  That’s helped them retain their customers, whereas with MTN…suddenly, the amount of shares they were losing, especially in the prepaid market, started to increase and you saw the knee-jerk reaction with the 79 cents deal a few months ago.  That’s really the wrong strategy because to compete purely on the price is not going to work if you look at key studies where this kind of interconnect-driven competition takes place.  I think Zunaid possibly hasn’t reacted in the right way, so they’re got Ahmad Farroukh who has been the CEO of Nigeria in the past. 

He’s seen this kind of competitive environment and maybe he will react in a better way to this kind of situation.  I think one of the things he’ll be doing will be similar to Vodacom managing the value offered to the customer and looking at things like infrastructure sharing to reduce the cost structure.  Those would be the right things to do if you want to operate in this kind of competitive environment.

ALEC HOGG:  But Zunaid Bulbulia has actually been promoted to Group Chief Operating Officer.  That’s what it looks like.  Why would he be promoted for this?

NADIM MOHAMED:  I think it’s more of a shuffle.  I think they have a problem in South Africa and they need somebody with the right experience.  You need somebody who has experience in this kind of competitive environment to get them out of the woods in South Africa.  If you look at Vodacom, they very much leverage the Vodafone experience in places like India.  They brought in skills from that part of the world to decide how best to react to the environment.  I think that’s what they’re trying to do.  They’re trying to get somebody from another market, which is more competitive – like Nigeria – to come and make the right strategic moves here.

ALEC HOGG:  Nadim Mohamed is with First Avenue and it makes a lot of sense.  Zunaid Bulbulia was CFO (Financial Officer) before he became CEO of South Africa, so he probably has his finger on the pulse as far as the books are concerned but sometimes, you need someone a little more entrepreneurial and that appears to be the reason behind that change.

GoHighLevel
gohighlevel gohighlevel login gohighlevel pricing gohighlevel crm gohighlevel api gohighlevel support gohighlevel review gohighlevel logo what is gohighlevel gohighlevel affiliate gohighlevel integrations gohighlevel features gohighlevel app gohighlevel reviews gohighlevel training gohighlevel snapshots gohighlevel zapier app gohighlevel gohighlevel alternatives gohighlevel price
ZS Digital OrbitDigital Marketing AgencyAffordable Web Development