MTN‘s annus horribilis continues, with CEO Phuthuma Nhleko parachuted in to address a crippling US$5.2bn fine imposed by the Nigerian Communications Commission. In July, Ahmad Farrouk, the company’s South Africa chief, resigned following a months-long strike by domestic staff.
MTN (JSE:MTN) CEO Sifiso Dabengwa has resigned, with former chief Phuthuma Nhleko taking over as executive chairman while the company seeks a replacement.
Today’s announcement follows the Nigerian Communications Commission’s (NCC) decision to fine the South African telco US$5.2bn for not cutting off the SIM cards of five million unregistered users.
The fine, announced on 26 October, corresponds to US$1,000 per unregistered customer. The West African country had been calling for the cards to be cut off in a bid to put the brakes on illegal activity, especially by militant group Boko Haram. The situation reportedly came to a head following the September kidnapping of finance minister Olu Falae.
“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 released by MTN.
Nhleko, who held the roles of executive director, group president and CEO between 2002 and 2011, has been non-executive chairman for the past two years.
“I will assume responsibility as executive chairman for the next six months as I pro-actively 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.
Following the recruitment process, Nhleko will return to the top non-executive role.
Alan van Biljon will remain lead independent director on the board of directors, the company said.
Discussions continue with regulator
Last week, MTN stated that it continued to “engage constructively with Nigerian officials at all levels,” emphasising that it had operated in the country for ten years, following “established principles related to sound corporate governance”.
According to CNBC Africa, MTN had still been discussing the number of unregistered users it needed to cut off when the NCC announced the fine.
In August, the outlet reported, the NCC asked MTN to switch off between 10 and 18.6 million users, but MTN had insisted it was unable to verify the identity of only 5.2 million users. Because the discussions were ongoing, MTN executives reportedly thought they did not face such immediate pressure.
Large rivals including Etisalat and Bharti did however meet the end of August deadline to switch off unregistered users, the NCC has been cited saying.
According to NCC data as of September, MTN has 62.5 million subscribers, Bharti, which trades as Airtel, has 31.1 million and Etisalat, which trades as EMTS, has 23.5 million.
Licences extended
On 3 November, the same date it announced the fine, MTN noted that the NCC had renewed and extended its spectrum in the 900MHz and 1800MHz bands. The licences, originally awarded in 2001, had been due to expire in 2016, and are now valid until 2021.
MTN said that the corresponding extension fee of US$94.2m was due on 31 December and conditional upon MTN fulfilling all of its regulatory obligations.
MTN also holds a unified access licence and a 3G spectrum licence.
