Chief Executive Officer of telecommunications firm, MTN, Sifiso Dabengwa , has resigned after the firm following the $5.2bn fine slammed on the company by the Nigerian Communications Commission (NCC).
Dabengwa tendered his resignation with immediate effect, saying it was “in the interest of the company and its shareholders”.
The fine, which amounts to double MTN’s profit last year, was for failing to cut off unregistered mobile users.
The firm was given until November 16, just two weeks, to pay the penalty.
The company is in talks to reduce the fine.
“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,” said Dabengwa in a statement.
He had been in the post since 2011.
Meanwhile, non-executive chairman Phuthuma Nhleko has been appointed executive chairman for a maximum of six months while the company looks for a successor.
It is believed that the NCC imposed the fine in the aftermath of the kidnapping of a former finance minister, Chief Olu Falae, when it was discovered that the kidnappers used an unregistered SIM card from MTN to demand a ransom.
Nigeria is MTN’s biggest market, with 28.5 million subscribers, followed by Iran and South Africa.
The resignation of Sifiso Dabengwa has not come as a surprise to analysts and market watchers.
His job was on the line ever since the authorities in Nigeria slapped MTN with a $5.2bn fine for failing to cut off mobile phone users who were using unregistered SIM cards.
Dabengwa had been in the top post at MTN for four years, but had served as the company’s chief operating office and as head of its Nigerian operations before that.
The ratings agencies Moody’s and Fitch lowered MTN’s credit rating last month because of the Nigeria fine, the size of which the company is still thought to be trying to negotiate lower.
Following the resignation of Dabengwa, a major shake-up is now expected at the telecoms company.
The new acting CEO, Nhleko has been with MTN since 2001 when he served as non-executive director and chairperson. From June 2002 he has been an executive director, Group President and CEO until March 2011. He has subsequently chaired the Group in a non-executive capacity for the past two and a half years.
Nhleko said in his new role he will 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,” he said.
Ratings agency Standard & Poor’s (S&P) has downgraded MTN from ‘BBB’ and ‘zaAA+’ to ‘BBB-’ and ‘zaAA-’ as a result of its operations in Nigeria and other “high risk” environments.
Stakeholders are reminded that MTN will continue to inform them of any material engagements with the Nigerian authorities via the Stock Exchange News Service of the JSE Limited.
Shareholders are advised to continue to exercise caution when dealing in the Company’s securities until a further announcement is made, MTN said.
To ensure compliance with King III, Alan van Biljon will continue to serve as the Lead Independent Director on the MTN board of directors whilst Nhleko takes over executive responsibility.
It has now been revealed that mobile network’s $5.2bn fine in Nigeria is not the first time the operator has found itself in trouble in countries where it operates.
Last week Monday, mobile network MTN confirmed that it’s been fined in Nigeria for failing to disconnect up to five million unregistered SIM cards.
The Johannesburg Stock Exchange (JSE) has subsequently launched an investigation into MTN over how it made the announcement of its fine last week. The JSE also said that it’s studying trades made prior to MTN’s fine announcement last week to determine if there was any possible insider trading.
But this is just the latest controversy for MTN in Africa and the Middle East.
– In 2012, rival Turkcell accused MTN of bribing officials in Iran and promising the country weapons to win a mobile licence in that country.
– In Uganda in 2011, MTN staffers were alleged to have manipulated the Mobile Money platform to steal 16 billion shillings ($160m).
– In 2012, MTN in Zambia came under fire for an IT specialist that had allegedly manipulated the company’s Let’s Go BEEG promotion to allow his girlfriend to win the $500m prize. The Competition and Consumer Protection Commission in the country advised that competitions should more transparent.
– In South Africa, in 2013, MTN’s chief corporate services officer, Robert Madzonga, was at the centre of a storm where he was accused of diverting sponsorship money for an ICT indaba.