MTN’s Chief Executive Sifiso Dabengwa has resigned.
Dabengwa’s resignation comes at a time when [DATA MTN:MTN Group Limited] is battling the Nigerian regulator over a 5.2 billion US dollars fine.
The fine was imposed after MTN failed to meet a deadline for disconnecting, according to some reports, about 5.1 million subscribers who had not registered their 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,” said Dabengwa.
The company has since appointed the current Non-executive Chairman Phuthuma Nhleko as Executive Chairman in a temporary capacity.
“I will assume responsibility as Executive Chairman for the next six months as I 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,” said Nhleko.
MTN’s largest shareholder, South Africa’s Public Investment Corporation (PIC), said on Monday it wanted to meet with Nhleko about his plans to tackle the fine and wants more staff at MTN to take responsibility for the penalty.
“A lot more people need to take collective responsibility for the fine… for the alleged failure to comply with regulatory requirements,” the PIC’s chief executive Daniel Matjila said in a statement.
Shares in MTN have slid by nearly 20 percent since Oct. 26 when the charge was first reported, but were up 1.4 percent at 159.65 rand by 1349 GMT on Monday, following news of Nhleko’s appointment.
“The board chose Nhleko because of his vast experience in Nigeria and his in depth knowledge of the company,” MTN’s spokesman Chris Maroleng said.
Dabengwa had been chief executive of MTN since 2011 when he took over from Nhleko.
“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,” Dabengwa said in a statement.
In his nine years as chief executive, Nhleko was largely credited with the company’s expansion outside its home market. The firm spans more than 20 countries, including Iran.
“Obviously having only six months he’s there to do something about the fine,” Momentum SP Reid analyst Sibonginkosi Nyanga said. “He’s the guy who built MTN into what it is.”
MTN also faces a Johannesburg bourse investigation on the timing of its announcement of the penalty.
Ratings agencies Moody’s and Fitch lowered MTN’s credit rating outlook to “negative” last month flagging the risk of significant cash outflow and the likely damage to the Nigerian business due to lengthy talks.
South Africa’s government has said it was concerned about the fine but said this would not affect relations between the continent’s two biggest economies. (Additional reporting by Zandi Shabalala; Editing by Keith Weir and Greg Mahlich)
– With additional reporting from © Thomson Reuters 2015