The former chief executive officer of MTN Group in South Africa, Mr. Sifiso Dabengwa, and his counterpart in Nigeria, Mr. Mike Ikpoki, were paid $2.8 million (about N560 million) as severance package after they were forced to resign, following the N1.04 trillion fine imposed on MTN Nigeria by the Nigerian Communications Commission (NCC).
According to Bloomberg, the information on the severance package was disclosed in MTN Group’s annual report published monday in Johannesburg, South Africa.
The report said Dabengwa was handed a 23.7 million rand ($1.6 million) payout for resigning from Africa’s biggest wireless operator after the company was fined by the Nigerian telecoms regulator, which equates to almost three years’ basic salary and took Dabengwa’s total 2015 remuneration to 40.6 million rand.
In Nigeria, MTN also paid Ikpoki the sum of 17.3 million rand ($1.2 million) in compensation, totalling $2.8 million (N560 million) that was doled out to both executives by the group.
MTN was fined N1.04 trillion in October last year, for contravening the directives of NCC on unregistered SIM card deactivation.
Though the fine was later reduced to N780 billion, Dabengwa and Ikpoki were forced to resign over the fiasco.
MTN is still in talks with the federal government on the payment of the fine.
Bloomberg reported that MTN shares fell 1.7 per cent to 144.86 rand as of 3.08 pm in Johannesburg, valuing the company at 267 billion rand. The stock has declined 24 per cent since the fine was made public.
The two executives were rewarded even after they resigned to take responsibility for the Nigeria penalty, which equates to about three years of MTN’s earnings before interest, taxes, depreciation and amortisation (EBITDA).
The former CEO of MTN, Phuthuma Nhleko, who returned as executive chairman to resolve the Nigeria crisis after Dabengwa resigned, was said to have been paid 5 million rand for work from November 9 until the end of the year. His contract runs until May 9, indicating a total payout of 17.5 million rand for six month’s work. He may also be due a bonus when his contract expires, according to the annual report. The company expects to name a new CEO by the end of June.
MTN and Nhleko have yet to settle the fine, despite hiring former U.S. Attorney General Eric Holder to represent the company and making a N50 billion ($251 million) down payment.
In March, the wireless operator proposed a $1.5 billion package that included cash, government access to its wireless network and an offer to buy Nigerian sovereign debt.
While the offer hasn’t been formally rejected, negotiations are not currently underway, Nigeria Minister of Communications Adebayo Shittu said last week.
“I am sure shareholders are not happy to pay out exorbitant golden parachutes to management that were asked to leave because they were incompetent,” Michael Treherne, a money-manager at Vestact Ltd., which holds MTN stock, said by phone.
However, the payout to Dabengwa may be the cheapest option if Nhleko can resolve the fine in MTN’s favour, he said.
Nigeria is the biggest of MTN’s 22 markets across Africa and the Middle East, with about 61 million subscribers.