N1.04tr fine: MTN may stagger payment, fails to get waiver

mtnINDICATIONS emerged yesterday, that MTN Nigeria might stagger the N1.04 trillion ($5.2 billion) fine slammed on it last week by the Nigerian Communications Commission (NCC) for contravening regulations after failing to get a waiver from the Federal government.

The fine relates to the timing of the disconnection of 5.1-million MTN Nigeria subscribers who were disconnected in August and September 2015 and was based on a fine of N200, 000 for each unregistered subscriber.

A presidency source, who spoke to The Guardian, yesterday, confirmed that this was part of the agreement reached at the series of meeting held on Thursday and Friday in Nigeria, by senior management team from MTN Group, South Africa and Nigeria and the Vice President, Prof. Yemi Osinbajo, in Abuja.

According to the source, “there have been series of meeting at the Presidency between the Vice President, Prof. Osinbajo and MTN team both from South Africa and the Nigerian arm. The telecommunications firm wanted a waiver considering their level of investments in the country, but government did not buy the idea of waiver. Instead, I think there will be concession, but certainly not a waiver.

“At the conclusion of the meeting, the MTN people negotiated on how to stagger the payment. The Presidency is even angry because MTN was a signatory to the regulation, but they are failing to comply with rules.”

The NCC has also claimed that MTN Nigeria has 28 accumulated breaches.

Indeed, the telecommunications firm, which has invested over $15 billion in Nigeria, currently enjoys about 43 per cent market share and over 64 million subscription, according to industry statistics.

Meanwhile, a telecommunications expert, Calixthus Okoruwa, has said that the effects of the sanction will be with Nigeria for a long time if something concrete was not done about it.

According to him, with due respect to NCC, this is making mockery of regulation in Nigeria.

Okoruwa, in an interview with The Cable, said investors are not likely to forget that this is one country where a regulator can summarily impose a fine to the tune of billions of dollars on a telecom operation.

“The entire industry should be worried because this will considerably jeopardize investor confidence for a long time to come.

“It is believed in NCC and state security circles that MTN’s database contained phone numbers of kidnappers, insurgents, miscreants, armed robbers and other criminals. Would you say MTN did enough to rid its database of security threats? A telecom company is not a security company. The role of determining security threats is that of government and its security organs”, he stressed.

Okoruwa, a public relations consultant, claimed that what was required of each telecommunications firm was to ensure that every phone user was registered, asking whether telecom firms have the capacity to determine the veracity of claims that customers have been made?

“I don’t think they do. If I bought a SIM and told the telecom firm that I live on Barack Obama Street in Kotangora, does it have any means with which to verify if this is correct? Is there a central database of Nigerians that it can contact to verify the details of SIM registrants? In each case, you will find that the answer is no. These companies were requested to register SIMs of their customers and I believe they did this to the best of their abilities and within the constraints of an operating environment that you cannot particularly say is an easy one”, he stated.

According to Okoruwa, regulators need to understand and appreciate that theirs is a very delicate balancing role, stressing that they needed to balance the interests of government, customers and investors.

“Where this balance is tilted then something goes wrong. In this particular case where a strong negative signal has been sent to investors, the reverberations will remain for a long time and it is the customers and the government that will end up the loser. This is ironic, given that the Code Division Multiple Access (CDMA) industry has since collapsed, as you know; and given that the GSM industry itself is struggling.

“At least one of the GSM companies has yet to break even. It needs more and more investment if it is to achieve this. The others still have a definite need to expand the scope of their operations and avail Nigerians of better quality of service”, he stated.

Okoruwa said that all the telecommunications companies also needed to invest heavily in broadband, in literally wiring up our country.

According to him, clearly, it will be several times more difficult to access financing to do any of these now, in the face of this very tragic fine, which the NCC says it has imposed on one operator.

“You probably heard of the slump in MTN’s share price in the wake of the announcement. That is the way investors, including lenders and venture capitalists, react when things like this happen”, he stated.

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  • emmanuel kalu

    Okoruwa, in an interview with The Cable, said investors are not likely to forget that this is one country where a regulator can summarily impose a fine to the tune of billions of dollars on a telecom operation.
    this is pure rubbish by this fool. what do you mean summarily impose? Did this fine come out of the air, they signed an agreement, they knew the law and agreed to it, they were given warning to compile and yet they failed. I praise NCC for this, and I praise the government for standing strong. What this does is show that our regulators are serious, and Nigeria can’t be a country where companies break the law or fail to follow the rules. GOOD JOB NCC. I can guarantee that MTN is not going anywhere, because Nigeria is their gold pot. where else in the world do you get this kind of market, and your have half the market demand.
    NCC should not listen to all this industry fools that are only looking out for them. Telco companies have the means to verify ones address and fail to do that. for industry fools to be saying they are not making any money, is pure rubbish. a company that doesn’t make any money goes of business. MTN is definitely making money, if they weren’t, they would have packed up.

  • taiwo johnson

    Is it a coincidence or is it me going on conspiracy theory tangent that there is some correlation between the whopping fine on MTN and the on going travails of Stanbic IBTC, both big and popular South African brands going through troubled waters in Nigeria’s economic climate. Am just saying as am wondering how come the two troubles are coming right about the same time. Is there an unseen hand behind the scene steering the Government Agencies to action on these two South African companies. Just thinking aloud.