PHUTHUMA Nhleko, the CEO who built MTN into an emerging-markets empire, is one of the front-runners to take over the reins at Anglo American.
The Anglo board is said to be considering Mr Nhleko, who has served as an Anglo director since April last year, as a replacement for Cynthia Carroll, who announced last month that she would resign after nearly six years as CEO. In the last Anglo annual report, chairman John Parker praised Mr Nhleko’s “excellent international business track record”.
Anglo said Ms Carroll would remain in her post until a successor was appointed and an appropriate transition had taken place.
A decision to appoint Mr Nhleko would be “received disappointingly by the market”, said a London-based mining analyst, who said Anglo needed a boss with a strong mining background.
Mr Nhleko, a civil engineer by training, holds an MBA in finance from Atlanta University and worked for Standard Corporate and Merchant Bank in the 1990s before joining MTN. His corporate finance background played a key role in the successes of MTN.
“Appointing Nhleko as CEO will come out of the blue for international investors. The reason Anglo is in the mess it’s in is because they haven’t had a strong mining person at the helm since Tony Trahar (Ms Carroll’s predecessor) took over in 2000,” the analyst said.
Anglo has underperformed relative to its peers and has faced delays and cost overruns at key projects, notably its Minas Rio iron ore development in Brazil.
An analyst who has covered MTN extensively for many years said Mr Nhleko would be a brilliant appointment for Anglo.
“If he is appointed as CEO, you can be sure that there will be action. If they want someone operational, he’s probably not their guy, but that’s what you appoint a good operations chief for. If they want someone strategic who can take the business to the next level, they will have to search far and wide to find someone more suitable than Phuthuma.”
According to the analyst, Mr Nhleko’s lack of operational mining experience should not be seen as a problem.
“It’s hard to believe, but you must remember that Nhleko had no (operational) telecommunications experience when he joined MTN. He is a fast learner, and he is very intelligent. Despite his many successes in emerging markets where government relations is seen to be crucial, he is very apolitical. He knows how to get the right people in the right positions and delegate.”
Mr Nhleko’s extensive corporate finance and dealmaking experience may also benefit Anglo, which is under pressure from many international investors to split off its South African assets and build its international footprint. It is also seen as an attractive future takeover target for the soon-to-be-merged Glencore and Xstrata.
When Mr Nhleko was appointed as MTN CEO in July 2002, MTN (at the time still M-Cell) had a presence in South Africa, Swaziland, Uganda, Rwanda and Cameroon, and had just bought a $285m licence to operate in Nigeria, a move that scared off investors. Under Mr Nhleko’s leadership, Nigeria was built into the biggest contributor to the MTN group.
His other big deals include the management buy-out of Transnet’s 18% stake in the business in 2002, which transformed him and a number of fellow executives into multimillionaires, and the $5.53bn takeover of Investcom in 2006. The deal increased MTN’s footprint from 11 to 21 countries and made it the largest operator in Africa and the Middle East. The share price went from R13 when he was appointed to R124 when he left in March 2011.
Mr Nhleko’s foray into Iran, now the second-biggest contributor to MTN, has been mired in controversy following allegations in a US court by rival Turkcell that MTN bribed Iranian and South African government officials to secure the licence in 2005. Mr Nhleko and MTN have denied the allegations.
Not all of Mr Nhleko’s deals worked out. In 2005, a $2.67bn takeover of Celtel (now part of Zain) fell through after Celtel two-timed MTN with Kuwaiti operator Mobile Telecommunications Company and accepted the latter’s $3.36bn offer. He also made two failed attempts to tie up with India’s Bharti Airtel in 2008 and 2009. The $23bn merger would have created one of the five biggest mobile operators in the world, but the deal was mainly sunk by South Africa’s foreign exchange controls.
Mr Nhleko, who also sits on the board of BP, has his own investments in mining and resources through Pembani, formerly known as Worldwide African Investment Holdings, a company in which he partnered with former South African Airways boss Khaya Ngqula. Pembani owns 20% of Engen and about 38% of cement maker Afrisam. It formed part of a consortium that acquired an 8% stake in BHP Billiton’s local thermal coal business, South Africa’s second-largest exporter, last year.
Appointing Mr Nhleko as Anglo’s CEO would appease the government, which urged Anglo to appoint a local CEO who supports South Africa’s transformational objectives, and the Public Investment Corporation, one of Anglo’s biggest shareholders, which — in contrast with many international institutional investors — feels Anglo should have a bigger focus on emerging markets.
More than a third of Anglo’s assets are in South Africa and the country accounts for about half of its operating revenue. Mr Nhleko is currently the only South African on Anglo’s board.
Mark Cutifani, CEO of AngloGold Ashanti, is another potential candidate. Others include Xstrata CEO Mick Davis; Alex Vanselow, a former finance chief of BHP Billiton; and Doug Ritchie, head of strategy at Rio Tinto. Internal candidates are expected to include Anglo American Platinum CEO Chris Griffith, finance director Rene Medori and strategy director Peter Whitcutt.
In a short statement issued on Sunday, Mr Nhleko said speculation about his appointment to Anglo American was “unfounded”, adding: “The Anglo American board, of which I am a member, has not engaged with me in any such discussions.”
* This article was first published in Sunday Times: Business Times