SUNDAY TIMES - 'Radical ICT policy shift a threat to growth'
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Sunday Times Business By CHRIS BARRON, 2017-03-19 00:00:00.0

'Radical ICT policy shift a threat to growth'

TRUTH TO POWER: Former MTN South Africa CEO Mteto Nyati, who will take over the reins at Altron in April, believes it is the responsibility of business leaders to help politicians 'understand what is possible'
Image: Business Times

Leading information and communications technology executive Mteto Nyati says the government's proposed ICT policy will drive investors away from the most critical industry in the country, and have devastating consequences for the economy.

Until last week Nyati was CEO of MTN South Africa, which he had begun turning around after a disastrous few years. Then, seemingly out of the blue, he announced that he was leaving to become CEO of ailing electronics group Altron - which he intends to restore to its former glory by focusing on ICT. He starts in April.

Having spent years in senior leadership positions at IBM and Microsoft before he was head-hunted to rescue MTN South Africa, Nyati has more experience of the ICT industry than most. And he believes it has the potential to play a critical rolein South Africa's economic growth.

But this potential will be destroyed if a white paper on ICT policy being pushed by Telecommunications and Postal Services Minister Siyabonga Cwele is implemented.

"It will be a radical change to the way we are doing things today," says Nyati.

The policy, which is driven by the government's desire to see more emerging black players in an industry supposedly dominated by "white monopoly capital", advocates for the creation of a new entity that will have a monopoly over the supply of radio frequency spectrum to all players in the ICT industry.

"The current mobile operators will have to get out of the infrastructure business and buy it from this one company," says Nyati. As a result, they will compete only on service, not infrastructure.

"This is not something we have seen working anywhere else." says Nyati.

The minister, he says, is risking the future of South Africa's ICT industry without understanding the consequences.

"This industry is an enabler of almost everything, whether financial services, insurance, retail - just about anything you care to mention, your IT is an enabler of that.

"If you start to create problems or make mistakes in the industry it is going to affect the entire economy. We have been trying to help the minister understand that we need to find a hybrid model here. We have given him a proposal which addresses his political objectives but at the same time protects the industry."

Nyati sounds far from confident about the outcome.

"The white paper does not communicate a good message about this country when it comes to investment. Who will want to invest in ICT in this country? Nobody. And if there is a lack of investment in this space that is an enabler of the economy, then the country is going to face serious challenges. It's going to be left behind."

Altron, the company Nyati has been hired to lead into a brave new ICT future, will be badly affected.

"We see the network operators as our partners. We will be delivering and managing services on behalf of our clients by leveraging the networks.

"If those networks are not up - if there is no investment in the latest technology - it is going to affect how we deliver to our customers."

Nyati began talks with Altron in July last year, just one month after MTN announced the appointment of Rob Shuter as group CEO.

He says there was "no connection at all".

He was "very reluctant" to enter into discussions with Altron because he had only been appointed CEO of MTN South Africa a year before and had begun an ambitious turnaround strategy.

"When I set out to do something I want to see that thing through," he says.

Which, given that the turnaround strategy he initiated is still far from completion - only halfway, he says - makes a nonsense of his decision to leave MTN. So why didn't he stay?

"At the end of the day, I looked at what was the right thing for Mteto. To take something as complex as this and make something big out of it is a unique opportunity I could not pass over.

"Here you had a company with a great history which now has huge challenges. But when I looked at it I saw it had huge potential."

Nyati, 51, says he is at an age "where I need to be thinking seriously about my legacy. Here you have a great South African company that has not been doing well. And to be part of the turnaround of this business six or seven years down the line, creating a business much bigger than it currently is, beyond South Africa, is something that appeals to me a lot."

The new job will be a greater test of his technical skills than leading MTN South Africa.

"The company is going to be leveraging my understanding of telecoms and deep understanding of ICT with a clear understanding of turnaround strategies and quality management."

But he's not just being driven by a narrow personal interest, he says.

"Black people like me, leaders who are black, we are largely associated with failures. Rightly or wrongly. Here you have an opportunity to have somebody like me turning around a traditionally white business.

"This appealed to me because of what it will mean to people watching. Because we as black South Africans need to be continually demonstrating excellence. We need to be showing that we can do things as well or better than others."

Is he ready to have the Venters breathing down his neck and second-guessing him?

He's used to dealing with stakeholders, he says. "The important thing as a leader is to manage stakeholders."

The Venters are not your run-of-the-mill stakeholders, of course. Bill Venter founded the company and he and his sons, outgoing Altron CEO Robbie Venter and former Altech CEO Craig Venter, are likely to continue to regard it as theirs. They have made it clear that they are still going to be very involved. Bill has stepped down as chairman but he and Robbie will be on the board.

"Of course this is something that you reflect on before taking the job," says Nyati.

"If you don't reflect on these things you could end up with a serious problem."

But he is satisfied that structural changes have shifted power from the Venters to minority shareholders led by Value Capital Partners, which has invested R400-million for a 15% stake in the company.

He says these changes will protect him from undue influence and "make sure there is room for the new team to take the business forward. The new structures guarantee that no one party will have a dominant voice."

Nyati announced on March 7 that he would be leaving MTN. He says there was no connection between this and MTN's announcement the week before of the first loss in its history.

On Friday March 10 he was gone, just three days before Shuter arrived.

He believes Shuter is the right man for the job.

"South Africa needs an MTN that is strong, the continent needs that. And that is what Rob is bringing."

The Public Investment Corporation and Black Management Forum attacked MTN for its appointment of a white group CEO, saying it was not good for transformation.

Nyati believes merit should take precedence.

The selection process must be as inclusive as possible, "but appoint the best person that emerges", he says.

Nyati matriculated at St John's College in Mthatha, qualified as a mechanical engineer at the University of KwaZulu-Natal and holds an MBA from the University of the Witwatersrand.

He has never been scared to speak truth to power and believes business leaders have a duty to do so.

"We are not operating in a vacuum. We are operating in an environment that will determine whether we are successful or not. If we do not speak out then we are doing the country a disservice."

Business leaders are exposed to things that political leaders are not exposed to. It is their responsibility to help the politicians "understand what is possible because maybe they don't know what is possible", he says.

"Maybe they're coming from a completely different school that makes them blind to certain things. Our responsibility is to open their eyes and partner with them in shaping this country.

"It is very important that they understand the unintended consequences of their decisions."

Such as the ICT white paper.