THE FALL OF COUCEIRO
One of the country’s longest CEOs, who survived many battles against the comrades, finally succumbed to the war itself. Two weeks ago Mascom’s Jose Vieira Couceiro whose reign was characterized by running battles with the unions, was told to walk, after seventeen years at Botswana’s biggest telecom. Staff writer TSHIRELETSO MOTLOGELWA traces the tumultuous journey … THE FALL OF COUCEIRO Read More »
One of the country’s longest CEOs, who survived many battles against the comrades, finally succumbed to the war itself. Two weeks ago Mascom’s Jose Vieira Couceiro whose reign was characterized by running battles with the unions, was told to walk, after seventeen years at Botswana’s biggest telecom. Staff writer TSHIRELETSO MOTLOGELWA traces the tumultuous journey of a man who, with allies at Government Enclave, often appeared bulletproof.
If you were walking around Government Enclave and discovered trade union comrades walking around, eyes bright, wielding blades with fresh blood on them, loudly enquiring, “who is next?” don’t be surprised. The comrades have just won yet another war, battles of which they always looked like they were losing. There is one lesson to be brought from the spectacular fall of one of the longest serving CEO in the country, Mascom’s Jose Vieira Couceiro. The lesson is that, you may win battles with the comrades, but fight long enough and sooner or later the war you will lose. A week ago on Tuesday afternoon, as the fiercely divided Mascom board met to discuss the future a man who has been viewed dimly by the workers representatives, one thing was clear, sooner or later he would be out. While a few top officials at Government Enclave sought to block the departure of the Portuguese, ultimately they lost the battle to the unions.
But to understand Couceiro one has to understand the animal that is the biggest telecom company in the country, Mascom. Mascom has one of the most complex shareholding structures in the local corporate landscape, which has often been a source of frustration for those inside and outside of the money churning machine. It is because of the sheer profitability of the company that despite protestations shareholders still stuck around for the nectar. The Portuguese is both a creation of, and a beneficiary of the peculiar corporate DNA that Mascom has. It is owned by the South African telecom MTN, the country’s biggest pension fund the Botswana Public Officers Pension Fund and Zimbabwean IT and telecom outfit Econet. While MTN owns a majority stake, through some unconventional corporate structure born of Mascom’s history, the pan-African giant has no management control, which has caused frustration for the Johannesburg strategists.
Mascom by 1998 when the telecom industry was in its early but fast growing phase, was owned by a local investment group DECI Holdings (36%), Portuguese Telecommunications (25%), the founder of Econet Zimbabwean billionaire Strive Masiyiwa (14%), the Debswana Pension Fund (15%), the International Finance Corporation and the Southern African Enterprises Development Fund at 5 per cent each. Six years later, the Portuguese Telecoms (at 50.1%) decided to offload its stake in the telecom giant, which were bought by both Masiyiwa and DECI, bringing the local corporate outfit to 60 percent while the Zimbabwean tycoon stood at 40 per cent. At that stage the BPOPF had itself bought into DECI, alongside BIFM.
However the Portuguese company did not leave quietly, they locked Mascom into a management contract, at 10 year intervals starting in 2004. It was recently renewed, meaning it will run into 2024. MTN itself entered the Mascom fray in 2005, gobbling up about 44 percent for about $128 million, just after Portuguese left, only to find that while they could get shares, they would have little say in the actual running of a company which was right in its very sector. Neither could MTN use its branding and strategy that it had applied continent wide in its various subsidiaries. At the same time BPOPF whose principles are based around developing a locally controlled business environment always had a negative view of a foreign CEO running one of its biggest investments, at a time when locals ran everything from the biggest banks such as FNB Botswana, Barclays and Standard Chartered to the mining giant Debswana. The BPOPF board is made up of one part Government representatives and trade union among them the Botswana Federation of Public Sector Unions, and in turn the pension representatives at the Mascom are split accordingly. Historically because of the pension fund ownership, at the time when the BPOPF was dominated by government, Mascom was viewed as politically connected, not just to the Government but to the ruling party too.
As it stands MTN has a 53 percent controlling stake while BPOPF owns 40 percent . The remaining 7 percent is held by Econet Joint Venture (Based in Mauritius), which is in partnership with Kagiso Mmusi, a local entrepreneur and son of the late Vice President Peter Mmusi. Government has until recently had a tight grip over BPOPF, so much that it influenced major decisions about the fund’s financial decisions as well as appointments, which were potentially influenced to meet political interests.
Due to the indirect 40 percent stake in Mascom, Government got Carter Morupisi, (then as head of Directorate of Public Service Management (DPSM) as chairman, a capacity he enjoyed at both BPOPF and Mascom for a few years.
Morupisi two years left the Mascom Board under pressure. The same year, the company then still chaired by Morupusi donated houses in Morupisi’s home village. At the time, Mascom approved the donation of those houses, and then invited Morupisi now as Permanent Secretary to the President (PSP) to receive the houses at the other end. He approved the donation to his village as chairman of Mascom, then received it at the other hand as PSP. There have been several reports in the media that Morupisi has political ambitions with his home village as his base. Sources say that such a donation was one of his ways to get closer to the people, romancing the political seat. It was often said that Couceiro had allies at Government Enclave which he sought to keep pleased and in turn they sought to keep him protected.
But the telecom giant has more direct relations with the ruling party itself. Mascom is currently headquartered at Tsholetsa House, a building owned by Botswana Democratic Party (BDP), situated at Plot 4705/6 Botswana Road Main Mall Gaborone. Tsholetsa House was previously used as the party headquarters housing the Botswana Democratic Party Secretariat before it was taken over by Mascom.
Last year an investigation by The Business Weekly & Review revealed that since Mascom assumed occupancy of the office complex, the company had spent millions of Pula to refurbish the building to match its corporate status while, as at now, paying an overly-inflated monthly rental of over P340, 000 to the BDP. The over-inflation is said to have been deliberate to make sure that BDP enjoys a cool P4 million plus, annually from Mascom. This is despite Mascom Wireless owning a P180 million state-of-the-art building at Phakalane, named the Mascom Innovation Centre (MIC).
The Business Weekly & Review found that the Phakalane offices were approximately 40 percent underutilized (occupation is sitting at only 60 percent), which means that Mascom could stop spending money on rentals at the BDP owned offices and occupy the Phakalane offices. The offices were constructed in 2012 and were expected to serve as Mascom’s main technical centre. Sources reveal that Mascom’s rental of the Tsholetsa House is just an indirect donation to the ruling party, which is why the multi-billion company is reluctant to vacate Tsholetsa House.
Morupisi’s ultimate exit from the Mascom chair faced considerable pushback as Morupisi had preferred to remain there, despite that majority of BPOPF board of trustees wanting him out. Morupisi at the time said he was not refusing to leave the Mascom position, saying that he had to wind up assignments that he was tasked with by the board before handing over to someone else.
One of the assignments, he indicated was a dispute emanating from the termination of a management contract with Portugal Telecomm Group. There was disagreement on some aspects of the contract between the parties, said Morupisi, indicating that there was no time frame set for the resolution of the matter. When the contract between Portugal Telecom and Mascom came to an end expectations were that MTN, a major shareholder could also provide technical expertise. Then, MTN Dubai tendered for the contract and won it, but Mascom decided not to appoint MTN Dubai. Morupisi is also said to have vociferously argued against MTN taking over all shares at Mascom. When Portugal Telecom exited Mascom, Chief Executive Officer (CEO) José Couceiro was re-appointed the CEO of Mascom, now under the direct employment of Mascom Wireless effective 1st October 2015.
However as the tables turned on government at the BPOPF board, and in turn at the Mascom board, with an increasingly vocal union part of the board, Couceiro faced an uncertain future, seen as a proxy for Government control of the telecom giant. But Couceiro also had made enemies within the BOFEPUSU itself with what they termed to be a labour insensitive management style. In 2016 Couceiro found himself in a public spat with the Deputy Secretary General of BOFEPUSU, Ketlhalefile Motshegwa over what the radical unionist called hostile environment for unionism at the telecom giant, characterized by ‘victimisation, persecution and discrimination of employees who have unionised at Mascom’. Motshegwa sought the resignation of the Portuguese executive warning that the federation, as custodians of the BPOPF kitty, viewed the company management in a very negative light. “Public servants whom we also represent cannot have their funds at BPOPF (majority shareholder at Mascom) being used to finance unethical trading and pay salaries of management who is hell bent on terrorising workers,” he warned.
At the same time MTN, which had continuously failed to wrestle management control of the telecom giant, grew increasingly frustrated. Earlier last month MTN caught the industry by surprise when it revealed that it would place its 53 per cent stake for sale. In addition it was revealed that the man looking to snap up the majority ownership of the one of the country’s most iconic companies was founder Strive Masiyiwa. The stake was valued at P3.2bn, and if anyone wanted in, they would have had to go past the existing shareholders first, being BPOPF and Masiyiwa. BPOPF was caught by surprise by the deal, while legally it also found itself hamstrung by its own rules that stipulate it could not hold a combined stake of more than P2.5bn in any single entity. At the valuation MTN was using, the BPOPF stake is around P2bn.
But there was the politics as usual. Government insiders gave the MTN management the impression that the political leadership preferred Masiyiwa taking over. MTN executives grew concerned, according to inside sources, when they were informed that all the way to the President Mokgweetsi Masisi, they were viewed a negative light.
The Friday weekly Mmegi reports that MTN directors “cited “politics” as part of their reasons for welcoming the Econet offer. MTN has publicly said it is reviewing its portfolio across Africa, watching for risks and opportunities, in the wake of harsh lessons in Nigeria where it was fined billions of dollars by regulators”. The Business Weekly & Review can confidently reveal that MTN directors told a Mascom board meeting that Masiyiwa was being favoured by the political leadership. However it has since emerged that The Business Weekly & Review this week learned that this was an elaborate scheme to make MTN lose confidence.
Furthermore Couceiro’s allies both within the regulator BOCRA and the Ministry of Telecommunications argued that the Portuguese be kept to limit disruption were there going to be a change of shareholding at the telecom giant. It has since emerged that, the impressions created both within Government and in the regulator were based on the false idea that somehow both Couceiro and Masiyiwa were greatly supported by the new leadership under Masisi.
There was always the matter of the renewal of Couceiro’s contract. The BPOPF arm of the board, desired a local CEO, while the government sought the renewal of the Portuguese’s contract. A temporary solution was found, he would work while a longer term solution was found. That was last year. As the union arm of the Mascom board took control, some opined that it would be a matter of time before the Portuguese is gone. However Couceiro’s allies had another trick up their sleeve – the impending selling of MTN shares to Econet. As the comrades were sharpening their knives, letters flew from Government Enclave in a frenetic fashion, in support of the embattled Portuguese.
At the same time the BPOPF was seeking legal advice on the possibility of muscling in on the shareholding availed by MTN. Things had changed for Couceiro and his allies. On that Tuesday Couceiro came in expecting to discuss the extension of his contract, only for him to be told it was all over. They would not even give him April in his position, but rather he would have to immediately hand over to his Mascom COO Dzene Makhwade-Seboni. He could get April but just to pack his belonings. In Makhwade-Seboni the BPOPF kill two birds with one stone, steady hands familiar with the entire hardware and software of the telecom giant, a local solid executive and another addition to the country’s top women executives. BPOPF is trying to think around how it can empower Batswana by broadening ownership of one of their most prized investments, with privatization mooted longer term.
Initially published on 12/04/2019