The South Africa’s MTN Group said on Monday that its chief executive will resign immediately as the telecoms firm continued talks with the Nigerian government over a $5.2 billion fine.
The Non-executive Chairman, Phuthuma Nhleko, was appointed executive chairman for a maximum of six months after Sifiso Dabengwa stepped down, Africa’s biggest mobile phone company said in a statement issued in Abuja.
MTN was fined in October by the Nigeria Communication Commission (NCC), the nation’s telecoms regulator, for failing to cut off users with unregistered 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,” Dabengwa said in a statement.
It will be recalled that the NCC issued a 5.2-billion-dollar fine to MTN at the end of October, after the company failed to cut off five million unregistered SIM cards from its networks as directed by the regulatory body.
A source at the commission, who pleaded anonymity, said that the commission had not review the fine slammed on the South African communication giant.
The regulator said that the fine was to prevent criminal’s activities in the country due to the claim that a terrorist group is using unregistered SIM cards to communicate.
The NCC said that the operator received numerous warnings over the unregistered or poorly registered SIM cards.
It said SIM cards with invalid registrations pose “a grave security risk” as the owners of the phones cannot be identified.
The country has experienced a surge in attacks by Boko Haram since President Muhammadu Buhari came to power in May.
MTN, which has around 60 million of its 223 million subscribers in Nigeria, saw its share price fall by more than 25 per cent after the news.
Some telecom experts and economists said that the magnitude of the penalty was the type that might scare foreign investors from coming to invest in the nations market.
Mr Osunde Adenekan, a telecom expert based in South Africa, said the issue of huge fine could be negotiated in order not to ruin the business of the company.
Mr Mike Schussler, an economist said that “I don’t think anyone in the telecommunications industry has ever had that sort of fine for a market of that sort of size,”
“It is absolutely over the top and entrenches the idea that Africa is not a continent for private enterprise.
“All this does is to add to the uncertainty and it will keep business away from Africa if we are not careful.”
Schussler said the fine will leave MTN with insufficient capital to expand and improve its network in Nigeria, which will pay the price through thousands of job losses.
As at the time of this report, the MTN office has not issued an official publication to attests the resignation and the MTN office in Abuja said no comment.