MTN subsidiary’s top execs fall in clean-up
Two high-level figures at MTN Nigeria get the boot as the telecoms firm tries to restore its reputation.
|||Johannesburg - Nigeria had slashed MTN Group’s massive fine by more than a third to $3.4 billion (R48.9bn), and the chief executive of the embattled Nigerian subsidiary had resigned, Africa’s largest telecoms company said yesterday.
The fine, down from $5.2bn, is still the largest meted out in the telecoms industry, according to experts.
They cited the US Federal Communications Commission fine of $100 million that AT&T is fighting in court.
Nigerian authorities have reduced the fine after five weeks of talks involving government and MTN officials.
MTN’s interim executive chairman Phuthuma Nhleko yesterday relieved the company’s chief executive in Nigeria, Michael Ikpoki, and the head of regulator and corporate affairs, Akinwale Goodluck, with immediate effect.
The developments come in the wake of the resignation of MTN group chief executive Sifiso Dabengwa last month with reports suggesting that he was also pushed out.
The company said its former chief operating officer and chief financial officer in Nigeria, Ferdi Moolman, would replace Ikpoki while Amina Oyagbola would take over as the head of regulatory and corporate affairs.
Moolman was previously the chief operating officer at MTN Irancell.
An MTN insider said the company had to sacrifice Ikpoki and Goodluck to pave the way for negotiations on the fine.
“So they had to leave to ensure a clean start for MTN in Nigeria,” the source said.
Reputation
Equity research analyst at Imara SP Reid Stockbrokers, Sibonginkosi Nyanga, said the company had no alternative but to dismiss the two to save its reputation.
He said the resignation of the two was inevitable.
“That was going to happen one way or another. Phuthuma did what Dabengwa should have done a long time (ago) to protect the company,” Nyanga said. “The company had to instil some sense of confidence in its investors that it was still in the game.”
Nigeria should be paid the fine by the end of the year, in four weeks’ time, MTN said. The fine will greatly boost Nigerian coffers depleted by corruption and the low price of oil.
The fine amounts to one-sixth of the west African nation’s 2014 budget.
The Nigerian Communications Commission (NCC) fined MTN for failing to deactivate 5.2 million unregistered cellphone SIM cards by an August deadline despite many warnings.
It is a national security issue in Nigeria, where law enforcers say Islamic extremists use cellphones to detonate bombs and criminals use them in kidnappings and armed robberies.
The regulator should order MTN to “commit to a speedier ramp up of 3G tower roll out”, money manager Vestact said in a note.
“That way the government can use the services provided by a private company to improve their fight against terrorism and corruption.”
The reduced fine still is more than the $2.6bn profit MTN says it made in Nigeria last year.
Yesterday, the shares rose 1.2 percent to R148.49 in the morning but later fell by as much as 5.5 percent before closing 4.61 percent lower at R140, which valued the company at R258.4bn.
The company still has lost almost 27 percent of its value since the fine was first announced on October 26.
MTN said Nhleko would continue to engage with the NCC on the fine.
The group would lobby for further reductions to a fine imposed by Nigeria, a source familiar with the matter said.
“The fine is still big enough to cripple MTN’s ability to invest in its network and that’s what further talks with the NCC are about,” said one source, who spoke on condition of anonymity.
Sasha Naryshkine, a fund manager at Vestact in Johannesburg, said: “I suspect that this is not a closed book.”
“(Nhleko) will no doubt be working harder to look for another reduction,” Naryshkine said.
Timeline:
October 26: The Nigerian Communications Authority fines MTN $5.2 billion for failing to disconnect more than 5 million unregistered subscribers.
October 29: Moody’s Investors Service revises MTN’s credit rating to negative. MTN maintains Moody’s Baa2 rating, two notches above junk status. Standard & Poor’s follows suit and cuts MTN’s long-term corporate credit rating to BBB- from BBB, taking it to one notch from junk.
November 9: MTN group chief executive Sifiso Dabengwa resigns. MTN chairman Phuthuma Nhleko assumes the role as acting chief executive and executive chairman.
December 3: MTN Nigerian chief executive Michael Ikpoki and the head of regulator and corporate affairs, Akinwale Goodluck, resign with immediate effect. MTN announces that it has received a letter from the commission reducing its fine to $3.4bn.
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