UPDATE: US$5.2 Bn Nigerian Fine: MTN Appoints Phuthuma Nhleko As Interim CEO

Phuthuma Nhleko, former chairman of MTN Group Ltd., who had then replaced Cyril Ramaphosa, now South Africa’s Vice President, had taken over at MTN in 2002 when the company had just over 5 million mobile subscribers and operations in six countries

Phuthuma Nhleko, non-executive chairman, will replace Sifiso Dabengwa for a maximum of six months, Africa’s biggest mobile phone company MTN said in a statement. South Africa’s MTN Group said on Monday its chief executive will resign immediately as the telecoms firm continued talks with the Nigerian government over a US$5.2 billion fine (₦1.04 trillion).

Reuters report continues:

MTN was fined in October by the Nigerian telecoms regulator for failing to cut off users with unregistered SIM cards.

The company said it continued talks with the Nigerian authorities over the fine.

“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.

MTN said it continued talks with authorities in Nigeria, the company’s biggest market, over the fine.

Dabengwa has been chief executive of MTN since 2011.

Shares in MTN have slid about 17 percent since Oct. 26 to 157 rand by Friday, following news of the charge.

Ratings agencies Moody’s and Fitch lowered MTN’s credit rating outlook to “negative” last month flagging the risk of significant cash outflow and the likely damage to the Nigerian business due to lengthy talks.

MTN said Nhleko, the current non-executive chairperson has agreed to act as executive chairperson for a maximum period of 6 months while the company identifies a successor for Dabengwa.

Nhleko has been with MTN since 2001 when he served as non-executive director and chairperson. From June 2002 he has been an executive director, Group President and CEO until March 2011. He has subsequently chaired the Group in a non-executive capacity for the past two and a half years (29 May 2013).

Nhleko said in his new role he will 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.

“Together with the MTN Board, my second priority will be to find an appropriate Chief Executive Officer to take MTN forward. I will then revert to my Non-executive Chairman role,” he said.

Ratings agency Standard & Poor’s (S&P) has downgraded MTN from rom ‘BBB’ and ‘zaAA+’ to ‘BBB-’ and ‘zaAA-’ as a result of its operations in Nigeria and other “high risk” environments.

Stakeholders are reminded that MTN will continue to inform them of any material engagements with the Nigerian authorities via the Stock Exchange News Service of the JSE Limited (SENS).

Shareholders are advised to continue to exercise caution when dealing in the Company’s securities until a further announcement is made, MTN said.

To ensure compliance with King III, Alan van Biljon will continue to serve as the Lead Independent Director on the MTN board of directors (“MTN Board”) whilst Nhleko takes over executive responsibility.

Phuthuma Nhleko’s Profile

Freedom Phuthuma Nhleko (born 7 April 1960) is a South African businessman, former CEO of the MTN Group, which is an Africa-focused holding group involved primarily in the operation of GSM cellular telephone networks.[1]

The group, which employs 6,000 people, reported turnover of R29bn for the year ended March 2005.

Nhleko is also chairman and one of the founding members of Worldwide African Investment Holdings, an investment holding company with interests in the petroleum, telecommunications and information technology industries. He helped build the company to a book value of investments of about R3,5bn.

As CEO of MTN group, Mr Nhleko has been appointed in 2007 to the Board of Directors of the GSM Association (GSMA), the global trade association for mobile phone operators. He serves the board during a two-year term from January 2007.

He was previously a senior member of the Standard Corporate & Merchant Bank corporate finance team. He also practised as a civil engineer and project manager for the Urban Foundation, and was a senior road engineer for the Ministry of Works in Swaziland.

Nhleko is a director of Johnnic Holdings, Nedbank Group and Old Mutual SA.

Nhleko’s academic qualifications include a BSc in civil engineering from Ohio State University and an MBA in finance from Atlanta University.