The N1.04 trillion ($5.2 billion) fine imposed on MTN Nigeria by the Nigerian Communications Commission (NCC) for not deactivating 5.2 million unregistered subscriber identity module (SIM) cards has take its toll on Africa’s biggest mobile operator with the immediate resignation of Mr. Sifiso Dabengwa as MTN Group President and chief executive officer (CEO) this morning.
A statement issued at 6.20 am from MTN headquarters in South Africa, said they have appointed Mr. Phuthuma Nhleko as executive chairman in a temporary capacity. Nhleko, the current non-executive chairman agreed to act as executive chairman for a maximum period of six months while the company identifies a successor for Dabengwa.
“MTN wishes to inform the market that MTN’s Chief Executive Officer, Mr Sifiso Dabengwa has resigned. 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 (SENS).
“Shareholders are advised to continue to exercise caution when dealing in the Company’s securities until a further announcement is made” the statement read. “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.” stated Sifiso Dabengwa.
Nhleko is no stranger to the business as he served as non-executive director and chairman of MTN from July 2001 until June 2002 and thereafter as 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 (29 May 2013).
“I will assume responsibility as Executive Chairman for the next 6 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 Gorup said to to ensure compliance with King III, Mr. Alan van Biljon will continue to serve as the lead independent director on the MTN board of directors (“MTN Board”) whilst Mr. Nhleko takes over executive responsibility.
“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,” added Nhleko. MTN Nigeria is MTN’s largest market with 62.8 million subscribers as at August this year and contributes about 40 per cent to the group’s revenue.
MTN Nigeria had incurred the wrath of NCC and Nigerian securities agencies for not deactivating the affected simcards within the stipulated time despite several meeting held with mobile operators to notify them of the urgency of the matter to help tackle insurgency and other criminal acts.
It was earlier reported that heads roll in MTN Nigeria and MTN Group over the manner top officials of the company mishandled the Nigerian simcards issue as well as the timing of the release of information to MTN shareholders at Johannesburg Stock Exchange (JSE) which led to suspicion of insider trading by the management of JSE.
MTN lost about 20 per cent of its market share since news about the $5.2 billion fine broke. NCC accused MTN of “accumulation of over 28 separate and proven infractions.” In 2013, MTN was fined N29.2million by NCC for sale of 146 pre-registered subscriber identification module (SIM) cards. The sale of pre-registered SIM cards contravened the provisions of the Telephone Subscribers Registration Regulations 2011 of NCC.
As of 30 September 2015, MTN has 233 million subscribers across its operations in Afghanistan, Benin, Botswana, Cameroon, Cote d’Ivoire, Cyprus, Ghana, Guinea Bissau, Guinea Republic, Iran, Liberia, Nigeria, Republic of Congo (Congo-Brazzaville), Rwanda, South Africa, Sudan, South Sudan, Swaziland, Syria, Uganda, Yemen and Zambia.