Johannesburg - Analysts say more senior executives at mobile network MTN [JSE:MTN] may have to face the music after the resignation of its group chief executive officer Sifiso Dabengwa.
Dabengwa is the first executive casualty at MTN after the company announced two weeks ago that the Nigerian Communications Commission (NCC) had fined it $5.2bn for failing to switch off five million unregistered SIM cards in a timely manner.
His resignation has come amid a tumble of MTN’s share price from a recent trading peak of R192.45 on Friday October 23 at 13:30 to R157 at 10:47 on Monday November 9. MTN is Nigeria’s biggest mobile network with 62 million subscribers in that country as of September, according to a quarterly update from the company.
Meanwhile, the Johannesburg Stock Exchange (JSE) is also investigating MTN for the way it made its announcement on Monday October 26 regarding the $5.2bn fine. Media reports about the fine surfaced hours before MTN made the SENS announcement on that day. The JSE said it is also looking into possible insider trading at MTN by studying the trades that happened before the announcement.
Dabengwa said in a statement on Monday November 9 that he stepped down in the interests of the company and shareholders because of the “most unfortunate prevailing circumstances occurring at MTN Nigeria”.
'There has to be a fall guy'
“It was inevitable that heads would roll,” World Wide Worx managing director Arthur Goldstuck told Fin24 in his reaction to Dabengwa's resignation.
This could be a sign that the CEO was ineffective at moving ahead with negotiations with the Nigerian regulator or that he was pushed by the board, said Goldstuck.
The way MTN has handled its communications regarding the Nigerian crisis also put the spotlight on how the company is managed and how it communicates, Goldstuck added.
“One of the big criticisms is that MTN hasn’t kept investors informed,” he said.
“It’s strategic decision-making is slow,” Goldstuck added.
But Goldstuck told Fin24 that Dabengwa’s resignation at the mobile network could result in a “shift in its entire thinking”.
Steven Ambrose, chief executive officer of research firm Strategy Worx, said it is no surprise that Dabengwa has quit. “When things go wrong, there has to be a fall guy. There has to be responsibility,” Ambrose told Fin24.
“I don’t think that MTN were being arrogant but I do think that they were somewhat remiss in their ability to understand what was going outside their control.
“And I think this is the first of a couple of high-profile resignations, to be honest,” Ambrose said.
He added that the CEO is like the “captain of the ship”.
“If the ship’s run aground, it’s ultimately the captain’s fault,” said Ambrose.
Ambrose also said he expected more senior heads to roll at MTN.
Meanwhile, Dobek Pater - a director and analyst at telecoms, IT and media research firm Africa Analysis - said he had expected senior executives at MTN’s Nigerian operations to step down first, rather than South African-based Dabengwa.
“I didn’t expect the CEO at group level to step down,” Pater told Fin24.
Pater described MTN’s $5.2bn fine in Nigeria as “excessive”. However, Nigeria is not cutting off MTN entirely as the NCC last week extended the mobile network’s licence to 2021, Pater explained.
“The fact that the NCC renewed the licence means that it’s not out to destroy MTN,” said Pater.
However, he also agreed that MTN needs to evaluate its communications regarding the Nigeria crisis.