Wednesday, 11 November 2015

MTN seeks extension of deadline to pay $5.2 billion fine

BARELY 24 hours after taking over the helm of affairs at MTN, the Executive Chairman, Phutuma Nhleko yesterday said that it hoped to resolve the lingering crisis around the $5.2 billion fine in two weeks.

Although, he has not asked for extension as a person, but industry analysts, yesterday, opined that his statement that he will resolve the issue in two weeks suggest that the telecommunications giant may not be able to meet the November 16 deadline (which is about five days from now), set by the Nigerian Communications Commission (NCC) for it to make the payment and as such may be running for an extension.

The NCC had on Monday insisted that MTN Nigeria must pay the fine no matter the challenges surrounding the telecommunications firm’s management. Continue......

Already, MTN is said to be seeking up to 60 and 80 per cent cut in the fine, according to Refinance Capital but talks with Nigerian authorities, so far, have not yielded any result.

Nhleko, who took over from the immediate past Chief Executive Officer, Sifiso Dabengwa, who resigned on Monday, was quoted as saying, “the group was “getting to the bottom of what may have transpired (to prompt the fine) and like any company, appropriate action will be taken”.

According to Bdlive, Nhleko would not comment on the amount that the company would settle on except to say “we are doing our best to try to arrive at an acceptable outcome.”

Nhleko, 55, agreed to switch from non-executive to executive chairman for a maximum of six months after Dabengwa took responsibility for the fine and resigned. The businessman, who was MTN’s CEO for almost nine years until 2011, will personally handle negotiations with the NCC and try to reduce the fine, which was imposed for missing a deadline to disconnect subscribers with unregistered SIM cards.

Dabengwa resigned as CEO after MTN suffered a plunge in its share price and its largest shareholder, the Public Investment Corporation (PIC), strongly criticised its lack of transparency in the way it dealt with the penalty for not disconnecting unregistered SIM cardholders in Nigeria.

The fall resulted in more than R60 billion in values being wiped out in a week. The Johannesburg Stock Exchange (JSE) is investigating it.

On Monday, the PIC again censured MTN and called for more accountability, saying it believed a lot more people “need to take collective responsibility” for the fine.

It questioned the role of the board of directors, which is charged with exercising fiduciary responsibilities for the benefit of shareholders. “In particular, we question the role of the risk and compliance function within MTN,” said the PIC’s CEO Daniel Matjila.

The PIC would request a meeting with Mr. Nhleko to understand exactly how he “plans to turn things around for the benefit of shareholders,” Matjila said.

Replacing the CEO, temporarily or permanently, would “not resolve the operational issue in Nigeria anytime soon,” he added.

The fall out of the penalty has resulted in the decline in MTN shares to about 16 per cent since the fine was made public two weeks, valuing the company at 289 billion rand ($20.4 billion).


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