With MTN CEO’s Resignation, Pressure Mounts on Nigerian Unit’s Head

Following weekend’s resignation of the Chief Executive Officer of MTN Group, Mr. Sifiso Dabengwa, there is pressure on the head of its Nigerian unit, Mr. Mike Ikpoki, to also take a bow.

Dabengwa resigned as a result of the crisis emanating from the $5.2 billion (N1.04trillion) fine imposed on MTN Nigeria by the telecoms industry regulator, the Nigerian Communications Commission (NCC).

However, MTN shares bounced back after falling more than three per cent following the resignation of its group CEO. The shares eventually closed 1.63 per cent higher.

Dabengwa, who had been at the helm for about four years, had been replaced by former CEO and current non-executive chairman, Phuthuma Nhleko, who will act in that capacity for a maximum period of six months while the company identifies a successor to Dabengwa, the Johannesburg-based MTN Group said in a statement monday.

Africa Analysis’ Dobek Pater was quoted by agency reports as saying the MTN management remains strong despite the resignation of the CEO, saying: “In general, the executive at the MTN group is of a high calibre. I think the group will be able to carry on with its activities.”

Pater said the biggest impact for the company over the next few weeks would be the outcome of negotiations over the massive fine.

A reliable source said the management of MTN Group was not pleased with the way the fine issue was handled, thus generating some form of controversies within the management level. In Nigeria, the source said the MTN management was equally not happy with the way the matter was handled, a development that has put Ikpoki under pressure.

Dabengwa resigned over the weekend after consultation with the board and his financial compensation hasn’t been resolved, MTN Group Spokesman, Chris Maroleng, said by phone.

“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 the statement.

MTN has until November 16 to pay the Nigeria penalty, which relates to the timing of the disconnection of 5.2 million subscribers and is based on a charge of N200,000 for each unregistered customer, amounting to N1.04 trillion.

The company’s shares lost almost a quarter of their value following the disclosure of the fine, before a partial recovery.
“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,” Nhleko said.

MTN said it would continue to inform shareholders of any material engagements with the Nigerian authorities.

When asked to comment on the resignation, the Director, Public Relations at NCC, Mr. Tony Ojobo, told THISDAY that the commission would rather not comment on internal matters of operators.

"It is not in the position of NCC to comment on the internal arrangement of an operator. So NCC sees the resignation of Sifiso Dabengwa and the appointment of Nkhelo as purely an internal matter that we cannot interfere in," he said.

Speaking on the consequences of the fine, Ojobo said the commission did not fine NCC because it wanted to make money from the telecoms company, but to show that there was need to respect the rule of law.

"The issue whether MTN will be able to pay the N1.04 trillion fine is a matter of policy and regulation. The issue of the fine is not about money, but about respect for the rule of law. There is a lesson to be learnt by all from all of these, and the lesson is that where there is rule of law, there is need to obey the rules because they guide the regulator from acting arbitrarily and also guide the operators to conform to existing laws. When this is done, it will boost investors' confidence in doing business in a country where there are laws and provisions for implementation of the laws," Ojobo said.

“Every investor wants to remain in an environment where there is rule of law that can protect their business. If there are laws and the laws are implemented, then everybody, including the customers, the operators and the regulator will be at peace. So the laws and regulations are put in place to protect every industry player, the subscribers and even the regulator,” he added.