A bitter fight over a multi-billion shilling MTN marketing contract

The deal, spread across 21 markets in Africa and Middle East, was too good to provoke large episodes of excitement in all the right places. 

Thus, it was a massive opportunity that presented CTA Space with a new challenge, yet a finger-licking breakthrough of handling one of Uganda’s largest marketing budgets. 

In details contained in various correspondences, M&C Saatchi had been shortlisted by MTN Group to pitch in a request for proposal leading to the appointment of a marketing services provider for its operations in southern, East, West, North and Central Africa, and the Middle East. 

Thus, in approaching CTA Space, M&C Saatchi was tying up the loose ends that conditioned it to sign a local marketing agency “in each key market to service the MTN Account”, where it had no established operations or affiliates.

Consequently, after various engagements, in September 2023, M&C Saatchi and CTA Space signed a Memorandum of Understanding (MoU), which among others, confirmed CTA Space as its affiliate in Uganda and barred it from participating in any other pitch deemed counter-competitive. 

“The [local] marketing agency shall not participate in other telecommunication pitches seen as direct competition to MTN,” the MoU signed in September 2023 by Jason Harrison, the M&C Saatchi chief operating officer and Twaha Kakaire, the CTA Space managing director, reads in part. 

Other agencies that had been shortlisted included TBWA (Omnicom), FCB (IPG), Hava (Vivendi), and Publicis (Publicis Group).

Thus, M&C Saatchi committed, if it won, “to enter formal negotiations with [CTA Space] for the services required” by MTN Uganda.

In Kampala, CTA Space immediately began working behind the hours, putting together documents that would form part of M&C Saatchi’s pitch at the group level.

“Coming back to you with the rate card, signed MoU and capability matrix for CTA Space,” Kakaire wrote on September 23, 2023, in an email trail leading to the pitch.

CTA Space also submitted ownership information, as a requirement, in which it put local proprietorship at 100 percent, black at 100, and female at 33 percent.

It as well submitted a structure of its key personnel, including details of managing director - Kakaire - heads of finance, media, operations, digital, strategy, creative, and IT, but noted that due to the significance of business that MTN is, “we have set off to recruit what we believe would be a more efficient and productive team in some of the key positions”.

Thus, it indicated that some of the details submitted were “candidates we have earmarked and yet to confirm,” before seeking a deadline extension from May 15 to May 31, 2024.

With most of affiliate agency details in place, M&C Saatchi, embarked on the rigors of presenting its pitch, whose outcome arrived almost six months later.

In an email dated April 22, M&C Saatchi informed CTA Space and other affiliates that it had been appointed the new marketing services partner across all MTN Group operating companies, effective January 1, 2025.

“I am delighted to confirm that M&C Saatchi Abel, in partnership with all our African affiliate agencies (that is you!), have been appointed new marketing services partner across all MTN Group operating companies … we are exceptionally excited ... to partner [with] you … we will be in touch … shortly to outline next steps and … plan for how we onboard this significant new client. But for now, I wanted to say thank you for all your hard work to date and a massive congratulations to each of you,” Jacques Burger, the M&C Saatchi Group chief executive officer, wrote in an email, in which he also urged affiliate agencies to “find an opportunity to celebrate in style with your teams”.

MTN Group subsequently published a statement, on the same day, noting that it was embarking on a new era of innovation with M&C Saatchi as its global marketing partner.

“Their progressive perspective and achievements in the marketing domain are precisely what MTN requires,” Bernice Samuels, the MTN Group marketing executive, noted in a joint statement, in which Burger committed “to applying our comprehensive industry insights and cutting-edge marketing strategies to support MTN’s growth ambitions”. 

The announcement, therefore, meant that TBWA, a part of the Omnicom network, which had been handling MTN Group’s marketing budget since 2017 and had also presented a request for proposal, had lost the contract, ushering in a new chapter, in which M&C Saatchi would drive MTN’s growth agenda in 21 markets, effective January 1, 2025.

Thus, in the months leading to June, M&C Saatchi and CTA Space embarked on tying the loose ends but the issue of the rate card, which would determine the per-hour retainer for junior, senior, and executive personnel, remained sticky, requiring a back-and-forth that would take almost two months to resolve. 

“… the rates you would charge MTN using a multiplier of [two] would work out to [be] significantly less than the [International Accounting Standard] benchmark rates we obtained … perhaps, the salaries you have provided are for more junior employees. Can we gather again … to go through this?” Graham Mears, the M&C Saatchi chief financial officer, wrote to Kakaire and Colin Asiimwe, who had been on-boarded as a consultant, in a May 22 email, indicating that his colleague (Nival) would send definitions in terms of seniority “to make sure we have the correct level of seniority”.

The discussion over the rate card would go on until June 17, at which point, Asiimwe wrote in an email that “we ran the numbers and I want [to] say we are good with these rates”.

The rates had proposed a per-hour retainer of an average of Shs39,666 for junior employees, Shs55,000 for mid-level staff, Shs64,075 for senior personnel, and Shs150,000 for executive-level employees, which Kakaire indicated in an interview, would, come down to a combined monthly, annual and five-year contract retainer of Shs280m, Shs3.36b and Shs16.8b, respectively.

“We had proposed a monthly retainer of Shs360m based on market rates but M&C Saatchi pushed it backwards to Shs280m. We aligned with the proposed rate” he said.

People familiar with MTN’s marketing, advertising, and communications budget indicate that the telecom spends about $30,000 (Shs111.3m) on media buying, about Shs300m on talent salaries as a retainer and roughly Shs300m on production for TV commercials, which varies, according to needs, per month.

The contract, therefore, runs in billions of shillings, which would be a mega opportunity for any agency to change its shape both in the short and long term. 

Monitor could not corroborate the figures since M&C Saatchi declined to get into details of its discussions with CTA Space.

But away from the figures, things severed when in a June 28 email, Nival Maharaj, the M&C Saatchi new business project director, informed CTA Space that while “we have been presenting your agency in the best possible light … regrettably, CTA Space has been rejected by MTN Procurement”.

“As we have now had the opportunity to engage directly with MTN … concerns were raised about the scale of CTA Space and capability and quality to deliver against 360-degree work. Even with the willingness to scale up the agency and skills for MTN, MTN are wanting (sic) to start off with an agency that is more established in this regard,” he wrote, adding: “We ... understand this is not the outcome you have been waiting for, however, the decision is unfortunately out of our control and has been mandated by MTN.”

Shocked by how events had turned, Kakaire, in a July 1 email, wrote: “This is an interestingly surprising twist”, requesting Maharaj to “get on a call and understand what happened”.

Subsequently, in a July 4 email, Kakaire noted that he had concerns on how MTN assessed CTA Space after bidding and winning yet they had gone through the process with M&C Saatchi to this point.

“This is not the situation we thought we would find ourselves in ... I suggest … a tri-party meeting of CTA [Space], MTN [operating company], M&C Saatchi … to appeal for reconsideration of the decision and reassess our 360 capabilities more directly,” he added.

Kakaire also sought to “inquire into the evaluation criteria used to assess [CTA Space], post-award,” and argued that : “… CTA Space, like any other agency currently in Uganda (apart from the [one] running the account), would have to scale up resources to manage the level of traffic and size of business of MTN’s magnitude.”

However, in a July 5 email, Maharaj informed Kakaire that a further meeting was not necessary, to which, in response, Kakaire, on July 9, noted that up to the point of rejection, CTA Space had not been “given a fair hearing to present the requirements that MTN needs, if any, despite having been pre-qualified".

“We made financial, and other commitments, after the announcement of the appointment, since we had an MoU in place. We were well ahead of the transition, in preparation for work within the timelines stated in the agreement. I strongly suggest that we resolve the issue amicably,” he wrote.

But the final nail would be delivered in a July 11 email, in which Burger reminded Kakaire that the MoU did not “commit to any obligations from ourselves beyond putting yourselves forward as our affiliate partner in Uganda, nor did it guarantee a contract or success or make financial commitments”.

With regard to the pitch, he noted, “you contributed or delivered no work in terms of strategy or creative development [and] submitted a rate card that had to be updated several times because of incorrect information”.

“… MTN in Uganda did a thorough review of your credentials and your rates and determined that you are not a suitable partner for them ... I appreciate that you are disappointed with this outcome, but a very clear and professional process has been followed and I need to ask you respectfully to now accept this decision – there is no room for further engagement on this matter as a decision has been taken and MTN will not be contracting with yourselves as the affiliate in Uganda,” Burger wrote in a detailed email in which he also questioned how CTA Space could incur costs or make commitments, financial or otherwise, in the absence of a contract.

Inflamed by the turn of events, Kakaire, in a July 25 response to Burger escalated the matter further by seeking MTN’s intervention and also indicated that “we had asked our lawyer to serve M&C Saatchi a demand notice so that the matter of who the local marketing agency that will service the MTN account in Uganda, is resolved before the contract is signed”.

He as well noted that CTA Space had on July 25 written to MTN through Sylvia Mulinge, the telecom’s chief executive officer, to expose the loopholes and procurement injustice happening against CTA Space, noting that whereas they understood that “M&C Saatchi holds our cards … we do not believe there is fairness or transparency in regards to them providing a clear or consistent reason for MTN rejecting CTA Space as the local marketing agency”.

“We believe we should either be the agency presented to you [MTN] for this work or be compensated 10 percent (excluding VAT) of the value of the rates agreed for revenue lost. We are basing this on the attached rate card, which M&C Saatchi had reverted to us as the final agreeable rates MTN was willing to work with,” Kakaire wrote, putting the 10 percent computed value at $527,925 (Shs1.96b) - inclusive of VAT or $447,394 (Shs1.66b) - minus VAT.

However, at this point, things escalated further with Burger, in a July 25 email, noting that he was no longer in a position to respond directly to CTA Space, advising that the matter be dealt with by their respective legal teams.

Subsequently, M&C Saatchi, acting through its attorney Matthew Wilson, who referenced an earlier letter, in a July 25 email, noted that the process through which MTN had rejected CTA Space had been transparent, noting that “to suggest that there are some ulterior or untoward motives on the part of [M&C Saatchi] was at best misguided and at worst defamatory”. 

“My client does not believe that it is liable to [CTA Space] for any damages and should [CTA Space] have incurred any financial losses, my client is of the view that the same are as a result of [CTA Space] jumping the gun (rather than my client’s breach or misconduct),” he wrote in a letter, where he also noted that MTN did not wish to be involved any further in the matter, warning CTA Space to cease from contacting the telecom in any way.

Asked whether they would find an agreeable solution to the current impasse, Burger told Monitor in a text exchange that CTA Space had been advised that they had not met the minimum selection requirements in a clear, transparent, and thorough process, noting that “given that CTA has taken legal action, we have handed the matter over to legal counsel and now await the outcome of the legal process”.

Text messages sent to Mulinge and Andrew Bugembe, the MTN chief financial officer, remained unanswered.

Monitor understands that M&C Saatchi has since presented Creatabuzz Communications, owned by David Case, who also has an interest in TBH Holdings - trading as TBWA - which currently is the MTN local marketing agency, as the new agency.

However, the battle is likely to take on a new form since CTA Space has warned that should MTN and M&C Saatchi go ahead to formalise Creatabuzz as the local marketing agency, it will seek legal action.

Kakaire last week told Monitor that if CTA Space is not the one to sign the contract, then it must be compensated, failure of which “a lawsuit shall be filed”.

“If the contract is signed with MTN and it is not CTA Space doing the job in question … against the appointment notice made to CTA Space, without compensation for incurred costs and business loss, then a lawsuit shall be filed against M&C Saatchi and everyone involved, on grounds of using their dominant positions to deprive CTA Space of its rightful gain,” he said.

The fight has thus sucked in Creatabuzz, which in an interview last week, Case said had been selected because of its competence, and not anything else.

“No one can discount Creatabuzz’s capacity. Its strength speaks for itself. It has worked on some of the best concepts in Uganda and has a capable team. To claim otherwise is misleading and disingenuous,” he said.

Case also indicated that Creatabuzz was not a new agency as had been claimed, noting that it had only rebranded from Limelight, which has been around since 1997. 

CTA Space stance on MTN marketing contract

CTA Space acknowledges that the procurement injustice against it by M&C Saatchi Abel, and the legal battle should be taken there. 

However, the contract awarding process is still ongoing … we can only share concerns at this point for things to be done the right way, such that the right people sign their contracts or get compensated. 

The reason we contacted MTN about the matter is we know they have very high standards of operation and they cannot just ignore the issue. 

They have taken up the matter through their auditing body and a case file has since been opened. We are confident that a good resolution is going to come out of that. 

Our main objective was to service the MTN account for the next five years and showcase our capabilities by lifting the top telecom brand to even higher heights with the scale of resources we had garnered in the transition. 

If that is not going to happen, then compensation - but not a walk!

If the contract is signed with MTN and it is not CTA Space doing the job in question within the timelines stated in the MoU, against the appointment notice made to CTA Space, without compensation for incurred costs and business loss, then a law suit shall be filed against M&C Saatchi Abel and everyone involved, on grounds of using their dominant positions to deprive CTA Space of its rightful gain.                                                                                  

Twaha Kakaire, CTA Space managing director

[email protected]