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Mobile phone industry – the drivers

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The last 26 years have witnessed the dramatic and dynamic transformation of the telecommunications industry in Africa and yet the drivers of this process are largely missing, not only in action, but in the daily narrative of the leadership challenges that are often associated with the widely acknowledged inability of the continent to effectively deal with the triple challenges of poverty, unemployment and inequality.

Report by Mutumwa Mawere

Who are the drivers of the mobile phone industry?  What do we mean by drivers?  What legacy do we draw from the last 26 years of the industry’s life?

The MTN group is the largest African mobile network company operating in 16 African states with about 123 million subscribers.

The company commenced operations in 1994 and has since spread its wings beyond the shores of Africa, making its story of interest to any pessimist who may mistakenly believe that African seeds will never bear fruit.

The identity of MTN is uniquely South African and whenever the yellow colour is displayed one must know that South Africa is present.

The group has 12 directors, 10 are non-executive directors.  The group is chaired by Cyril Ramaphosa and its chief executive officer Sifiso Dabengwa is a Zimbabwean-born South African national.

It has two women on the board.  The number of blacks on the board is six and the number of white directors is three, making the board non-white controlled.

The chief financial officer is Indian making the group’s key drivers non-white.  The predecessor to Dabengwa was black, Phuthuma Nhleko.

On paper it would appear that MTN is a black-controlled project, but the reality may be different when one looks at the shareholding, the value chain and the role of black people in it.

There is no doubt that the majority of its 123 million subscribers are blacks but in terms of shareholding of the group, it is a different story.  About 68% of the issued share capital of MTN is held by the public with the balance held by non-public.

Directors of the company hold about 0,13% of the company and the black empowerment related entities own about 4,54%.

The Government Employees Pension Fund holds about 17% of the issued share capital.  The MTN brand, therefore, unlike Globacom, Telecel, Econet and the then Celtel, is not associated with individuals but institutions.

The control of the board is in black hands and, therefore, it is perfectly natural that more is expected from MTN as a leader of the pack than any other company in defining what it means to be African.

The heritage or identity of Africa in the telecommunications space invariably, is shaped and defined by what MTN does or does not do.

It is not uncharacteristic of Africans to point fingers on others to find fault in the development trajectory of the continent and yet there are so many good and positive stories that should inspire a new generation of Africans to climb the opportunity ladder.

Of the top 10 strategic investors in the mobile phone industry, only three can be considered to be black controlled — MTN, Globacom and Econet.  These top 10 investors account for about 69% of Africa’s approximately 700 million subscribers.

In terms of subscribers, MTN is closely followed by Vodafone with about 111 million subscribers serviced by operators that are under its control and management.

It is significant that Vodafone now controls South Africa’s first cellphone operator, Vodacom, a company whose board is chaired by Peter Moyo, a Zimbabwean-born South African national.  Vodacom operates in five African states.

It is noteworthy that three Zimbabwe-connected individuals are in the top leadership of African investors in the mobile network space — Strive Masiyiwa, founder and chair of Econet Wireless group with about eight

million subscribers under his management. For a small country, Zimbabwe must be congratulated for sneaking its products at the pinnacle of this important industry.

The failure of the country to maximise on the market power can and should never be blamed on British imperialism, but on ignorance.

Kuwait’s Zain, United Arab Emirates’ Etisalat, Russia’s Beeline Vimplecom. Luxembourg’s Millicom, India’s Bharti Airtel, France’s Orange and UK’s Vodafone are the dominant investors in the industry.

African subscribers are the engine that drives the industry and yet the faces of the men and women who make decisions about the protocol of service and the industry’s character are not necessarily black Africans.

When one goes to China, for instance, it would be unthinkable to find the mobile industry controlled from outside and equally it would be unusual for black Africans to dream of controlling the Indian market.

Being African is not as hotly contested as for instance being Korean or Japanese.

Images of African leaders in the corporate world are missing in the book of faces that must inspire the continent’s people to believe in themselves.

The history of the mobile phone industry has already removed the faces of Mo Ibrahim and the late Miko Rwayitare and the Sawaris family who founded the Orascom group.

The risk of African faces being wiped out of the leadership of this lucrative industry is very high.

Notwithstanding, the conversations that take place between and among Africans often are devoid of strategies required to position black Africans at the pinnacle of the industry.

The regulators are predominantly black and it is not unusual that the regulators devote more of their time talking about the next conference to attend and the quantum of allowances to be realised from attending board meetings.  The faces of regulators are missing in action.

State actors who preside over the ministries of communication invariably look to the mobile phone industry to supplement the limited funds allocated in the budgets, to the extent that the compromises that greed and hunger impose on the individuals concerned effectively undermines the promise of an industry that can make the difference that the mobile consumers deserve.

The viability of the mobile industry is not inevitable, but what the past 26 years have shown is that Africans love to communicate on the phone and they are willing and able to pay for the service, hence no donor has been called to intervene in the industry unlike is the case in many African states where begging for aid is part of the business case of nation building.

The performance of the industry underpinned by millions of willing market participants goes a long way to show that a regulated market can produce better outcomes than can ever be hoped from state actors venturing into the business of business.

The lack of investment on knowledge about our firms and what is required to make them work better can be more toxic to development than the conspiracies of non-Africans.

In our generation and in our lifetime, we have seen the birth of the mobile industry and we have witnesses its growth and development.
At the top of the leadership ladder, we have two Africans — Ramaphosa and Dabengwa.  Their failure to conspire in order to inspire cannot be blamed on colonialists or imperialists.
The colonialists of yesterday understood the value and power of network capital.

They came to Africa with no cash but dreams of a better life.  They conspired to achieve their goal and our failure to find white people, for instance, in the black townships is not accidental for they aspire to work on their dash in comfort.

Although Ramaphosa and Dabengwa are the two top mobile phone ambassadors, their visibility in Africa and more significantly on what matters to its future, must be of concern to all.

To the extent that the MTN group’s future is deeply embedded in Africa, what are the obligations of these men in empowering people with knowledge about the role of business in delivering the promise of a better and prosperous life for all? Nigeria is now the largest African mobile phone market and yet Ramaphosa’s influence is only in the context of South Africa’s ANC and not Nigeria’s PDP.

Cecil John Rhodes’ influence went beyond the Limpopo River because he understood that things he was passionate about — being English and all that it meant to him — required a business model that Africans who find themselves in the same position as he was, have yet to appreciate and understand.

The African century will only start when we take ownership of our destiny by building the knowledge systems on the role of firms and their actors in delivering a promise of a civilisation that inspires hope.

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