Of MTN’s beautiful adverts and reputational risk

MTN’s adverts have always been exceptional, creative and entertaining. They are often very memorable and influence purchase or patronage decision. As an ad freak, I rate MTN’s ads higher than other networks. Etisalat can also hold its own with its sleek and ‘yuppie’ ads targeted at upwardly mobile individuals. MTN’s current corporate ad ‘We were there’ is up there in terms of connecting with the target and telling the story of their achievements in Nigeria. The scene where a young dad, who just recovered his sight, saw his baby for the first time and his wife waiting with bated breath to see if her husband could see again, was very emotional and drove home the point of how MTN touches lives. Its influence in the Nigerian telecom space is well known, with a customer base of 58 million and 44 percent of the market share. Its ICT solutions are heavily relied on by key sectors like the financial services sector.

But its recent corporate misdemeanours, with the latest being a $662,000 fine on MTN Uganda by a Ugandan commercial court for sabotaging the business of a mobile money company EzeeMoney Limited, and the much-talked-about NCC fine of $5.2 billion, is chipping away at its reputation and public image. MTN is currently facing a reputational risk which is the risk that a business will lose revenue or incur significant costs as a result of damage to its reputation or public image. Public perception of MTN may have been affected by the negative publicity associated with these fines, affecting the brand and its product.

Before now the MTN brand was already gradually losing its value and equity amongst subscribers with the experience not being a happy one because of poor service, intrusive ad calls and SMS, and perceived capital flight.

We can also have a case of decreased patronage because of such negative publicity. Recall most subscribers switched to other networks when the opportunity to ‘port’ came up. This may happen again.

Also this type of risk, which normally comes from service or product failure, can also come from lack of compliance to regulations and unfair practice. The fines were clearly because of lack of compliance and unfair practice and shows some people have not been doing their job even with the beautiful adverts we see on TV. With the Ugandan court fine there will be flurry of articles from so-called public affairs analysts (just like when the NCC fine broke) to paper over this faux pas but it will take a lot of image management genius to bring back the much-loved MTN brand and MTN board’s decision to ensure the group lives up to its commitment of adding value through its products and services and good corporate governance.

Finally, MTN’s case seems to give credence to the belief that regulatory compliance and adherence to best practice is determined by the operating environment, not culture of excellence, good corporate citizenship and corporate governance. Most companies exploit lax regulations and lack of rule of law in most sub-Saharan African countries to their advantage, leading to substandard products/services and unfair practices. It’s even a shame that this is associated with multinationals which should be epitomes of best practice and are expected to show consistency everywhere they operate.

For companies, even SMEs operating in Nigeria, it is a new era of compliance and rule of law; you either live up to best practices and corporate governance or set yourself up for reputational risk and regulatory fines.