(Reuters) – South Africa’s MTN Group has asked its former head to take temporary charge of Africa’s biggest mobile telecoms company after its chief executive resigned over a $5.2 billion fine imposed by Nigeria.
Non-executive chairman Phuthuma Nhleko was named executive chairman of MTN for a period of up to six months after Sifiso Dabengwa stepped down as CEO with immediate effect on Monday.
The priority for Nhleko will be trying to get a reduction on the fine demanded by the Nigerian Communications Commission (NCC). Nigeria, Africa’s most populous nation, is MTN’s largest market and contributes more than a third of its revenues.
MTN said it was continuing talks with authorities in Nigeria over the fine. The NCC penalised MTN last month for failing to cut off users with unregistered SIM cards.
The regulator has been pushing companies to verify the identity of their subscribers because of fears that unregistered SIMs were being used for criminal activity in a country facing Islamic militant group Boko Haram’s insurgency.
Shares in MTN have slid by nearly 20 percent since Oct. 26 when the charge was first reported but traded 2.2 percent higher at 160.93 rand by 1015 GMT after Nhleko’s appointment.
“The board chose Nhleko because of his vast experience in Nigeria and his in depth knowledge of the company,” MTN spokesman Chris Maroleng told Reuters.
Dabengwa had been chief executive of MTN since 2011 when he took over from Nhleko.
“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.
In his nine years as chief executive, Nhleko was largely credited with the company’s expansion outside its home market. The firm spans more than 20 countries, including Iran.
“Obviously having only six months he’s there to do something about the fine,” Momentum SP Reid analyst Sibonginkosi Nyanga said. “He’s the guy who built MTN into what it is.”
MTN also faces a Johannesburg bourse investigation on the timing of its announcement of the penalty.
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.
South Africa’s government has said it was concerned about the fine but said this would not affect relations between the continent’s two biggest economies.