MTN Group Ltd. Chief Executive Officer Sifiso Dabengwa resigned from Africa’s biggest mobile-phone company as senior executives negotiate with Nigerian regulators about the payment of a $5.2 billion fine. The shares declined.
Dabengwa will be replaced by Chairman Phuthuma Nhleko, 55, for as many as six months while the company searches for a permanent successor, Johannesburg-based MTN said in a statement on Monday. Dabengwa, 57, resigned over the weekend after consultation with the board and his financial compensation hasn’t been decided, 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. He didn’t answer calls to his mobile-phone seeking further comment.
Nhleko led MTN as CEO for almost nine years until 2011, increasing subscriber numbers 30-fold and expanding the company into new markets such as Iran and Syria. MTN now has more than 230 million customers in 22 countries. Nhleko said he will deal with the Nigerian Communications Commission directly about the fine, which was imposed for missing a deadline to disconnect unregistered subscribers.
“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 in the statement.
MTN has until Nov. 16 to pay the Nigeria penalty, which relates to the timing of the disconnection of 5.1 million subscribers and is based on a charge of 200,000 naira ($1,008) for each unregistered customer. The company’s shares lost almost a quarter of their value following the disclosure of the fine, before a partial recovery.
The stock fell as much as 3.5 percent in Johannesburg and traded 1.6 percent lower at 155 rand as of 9:37 a.m. local time. That extended the decline since the penalty was made public on Oct. 26 to about 19 percent, valuing MTN at 286 billion rand ($20 billion).
“Sifiso leaving is a loss to the industry,” Shameel Joosob, CEO of MTN competitor Vodacom Group Ltd., said by phone. “I see this issue as a bump in the road. They will probably negotiate a settlement on the fine.”’