Home News African telecoms firm MTN chief quits over huge Nigerian fine

African telecoms firm MTN chief quits over huge Nigerian fine

Published on 09/11/2015

The chief executive of South Africa-based mobile phone operator MTN has resigned over a $5.2 billion fine imposed on the company in Nigeria, the telecoms giant said in a statement Monday.

The Nigerian Communications Commission (NCC) fined Africa’s largest telecoms firm for missing a deadline to deactivate 5.1 million unregistered SIM cards.

“Due to the most unfortunate prevailing circumstances occurring at MTN Nigeria, I, in the interest of the company and its shareholders, have tendered my resignation with immediate effect,” CEO Sifiso Dabengwa said.

MTN has appointed non-executive chairman Phuthuma Nhleko, 55, as executive chairman for a maximum of six months while the company identifies a successor for Dabengwa, the statement said.

Dianna Games, executive director of the South Africa-Nigeria Chamber of Commerce, said the government of Nigerian President Muhammadu Buhari appeared to be acting for financial and security reasons.

“This is a government in fiscal crisis after the fall in the oil price. $5.2 billion would bring in a huge chunk of revenue,” she told AFP.

“Security issues are the stated priority of the president… groups like Boko Haram could be using unregistered SIM cards to plot.

“There’s a broom sweeping Nigeria of absolute adherence to the rule of law. Perhaps it’s overzealous in an environment that has traditionally been more lax.”

– Falling share price –

MTN’s share price fell from 190.84 rand ($13.4), shortly before the fine was revealed, to close at 157.45 rand on Friday — a fall of 17.5 percent in two weeks.

Shares fell about 1.7 percent on Monday morning.

The Johannesburg Stock Exchange (JSE) has also launched an investigation into MTN for “possible insider trading” before the company announced it had been hit by the fine.

The probe could result in South Africa’s bourse operator slapping MTN with another hefty penalty or result in criminal charges.

Last week Dabengwa travelled to Nigeria to negotiate a cut to the fine, but his resignation suggested little progress had been made.

Nigeria, Africa’s most populous country, is MTN group’s largest market where it had over 62.8 million subscribers by the second quarter of this year.

New executive chairman Nhleko previously led MTN from 2002 to 2011.

He is credited with growing the company’s consumer base 30-fold during his tenure.

Nhleko said he would “proactively deal with the Nigerian regulator and will continue to work with them in addressing the issues around unregistered subscribers as a matter of urgency”.

“Together with the MTN Board, my second priority will be to find an appropriate Chief Executive Officer to take MTN forward. I will then revert to my non-executive Chairman role,” Nhleko said.