PIC asks tough questions of MTN

MTN has received a $5.2bn fine in its biggest market Nigeria. (Bloomberg)
MTN has received a $5.2bn fine in its biggest market Nigeria. (Bloomberg)

Johannesburg - MTN's biggest shareholder, the Public Investment Corporation (PIC), is demanding answers from the embattled mobile network following the resignation its group chief executive officer.

MTN announced on Monday that its group chief executive officer Sifiso Dabengwa has quit in the wake of the Nigerian Communications Commission (NCC) fining the mobile network $5.2bn for failing to disconnect five million unregistered SIM cards in a timely manner.

The fine sent MTN’s share price on the Johannesburg Stock Exchange (JSE) tumbling last week and has even prompted an investigation from the bourse into how the company announced the penalty to shareholders.

In the meantime, the PIC - which is MTN’s biggest shareholder with a 13% stake in the company - has asked questions of MTN and its board.

“Whilst the PIC acknowledges that Mr Dabengwa’s resignation is the noble thing to do in the current circumstances, the PIC is of the view that a lot more people need to take collective responsibility for the fine that was imposed on MTN Nigeria for alleged failure to comply with regulatory requirements in that country,” said the PIC in a statement.

“In this regard, there still remain questions as to 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. Could risk and compliance have not foreseen that there were instances of noncompliance, which could lead to penalty? What actions were taken to address noncompliance and mitigate possible fallout?”

The PIC said it further noted the appointment of Phuthuma Nhleko as executive chairman and that it plans to request a meeting with him to “understand exactly how he plans to turn things around for the benefit of shareholders”.

The PIC further said that it wants the current challenges to be “dealt with immediately”.

An MTN spokesperson, at the time of writing, was not in a position to comment yet on the PIC’s statement.

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