The CEO of Africa's largest mobile telecoms company, MTN Group, has resigned following two weeks of wrestling with the Nigerian authorities over the imposition of a massive fine.
In a statement to the Johannesburg Stock Exchange, the company announced that Sifiso Dabengwa will leave with immediate effect, to be replaced temporarily by non-executive chairman Phuthuma Nhleko.
MTN confirmed that Dabengwa's resignation was related to a massive $5.2bn fine imposed on the company by the Nigerian regulator, the Nigerian Communications Commission (NCC) at the end of August.
The firm has a week left to pay or negotiate a settlement. The fine is almost double the firm's net profit for the whole of 2014, and its shares have tumbled by 25 percent since it was announced. Last week, the JSE halted trading in MTN stocks temporarily amid rumours that a settlement was due.
The fine, which works out at $80 for every MTN customer in Nigeria, was imposed because MTN allegedly failed to meet a deadline for disconnecting customers who hadn't re-registered their SIM cards with biometric information required under Nigerian law.
The fine amounts to ₦200,000 ($1,000) for every customer who should have been disconnected following the introduction of new regulations in 2010.
Reports have suggested that the harsh terms were imposed because the Nigerian economy, until recently one of the fastest growing in Africa, has been hit by the drop in oil prices and terrorist activity, which has created a tax shortfall for the government.
But South Africa's Sunday Times said this week that sources in the NCC linked the penalty to the kidnapping of a former finance minister in September. According to that report, it was MTN's inability to trace SIM cards belonging to the attackers that proved "the final straw".
MTN is adamant that negotiations with the Nigerian government are ongoing and that Dabengwa's resignation is not an admission of guilt.
It's been a tough year for MTN. A two-month-long strike at its most valuable subsidiary, MTN South Africa, claimed the scalp of that firm's CEO, Amhad Farroukh, in July. Farroukh was replaced by the former boss of Microsoft South Africa, Mteto Nyati.
Telecoms analyst Arthur Goldstuck of South African business research firm World Wide Worx, said investors' confidence in MTN has taken a "continual hammering" over the past few years.
"Dabengwa's departure is a sign that MTN has to win back the confidence of investors and that it needs to take decisive action to do so," Goldstuck said. "It's a strange time for the CEO to leave, in the middle of negotiations that he must have been part of."
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