Business
Nigeria: Communications Regulator fines MTN a record $5.2 billion
MTN Nigeria, which is a subsidiary of Africa’s biggest telecommunications company – the MTN Group – was fined a record US$5.2 billion by the communications regulator – the Nigerian Communications Commission – for failing to meet an August deadline to deactivate 5.2 million unregistered cellphone SIM cards – considered a security threat with Nigeria confronted by an al-Qaeda-linked Islamist terror group – the Boko Haram. Nigerian officials have expressed concern that criminals or terrorists could use MTN’s unregistered SIM cards – which number more than five million – as a way of evading police surveillance.
The fine amounts to nearly 2 years’ profits for MTN Nigeria, by far the company’s most profitable subsidiary.
Nigeria’s is Africa’s largest economy and biggest oil producer and President Muhammadu Buhari, who was elected this year, says he inherited depleted coffers as he struggles to create jobs and fulfill other campaign promises. The fine also sheds light on the stern disciplinary attitude of Buhari.
The fine imposed on MTN, along with smaller ones against 2 Nigerian banks for violating banking regulations, is also seen as an indication that Nigeria under Buhari will demand strict enforcement of regulations that were often ducked in the past. Nigerian officials have accused MTN of ignoring repeated warnings to deactivate all SIM cards that were not properly registered with the photos and fingerprints of the owners.
Corruption and lax regulation have long plagued Nigeria, allowing revenue to leak from official channels and keeping a lot of its people poor while a politically connected elite became rich. But the crackdown on MTN suggests that the Buhari administration is running a tighter ship. Buhari has already moved to take tougher action on corruption in the oil industry.
In a telephone interview Thursday with reporters, Tony Ojobo, the spokesman for the Nigerian Communications Commission, said the regulator will not buckle to pressure from MTN shareholders to reduce the fine levied against the South African-based telecommunications giant.
Underscoring the perceived reliance on mobile phones by Islamist extremists in Nigeria’s war, the military regularly cuts cellphone service in areas under attack by Boko Haram. Unregistered mobile phones can also be used by criminals to hide their tracks. Ojobo said unregistered MTN SIM cards were used to make calls demanding ransom in the September kidnapping of former Finance Minister Olu Falae.
Institutional shareholders in MTN, have complained that the huge fine is punitive, and warned it could hurt investor confidence in Nigeria, Africa’s most populous nation of about 170 million people.
South Africa’s Public Investment Corporation, MTN’s biggest shareholder with more than 15 percent of shares, said Tuesday it is concerned about the fine and allegations that MTN did not immediately disclose it to shareholders, according to Daniel Matjila, CEO of Public Investment Corporation. The Johannesburg Stock Exchange is investigating.
Ojobo said Nigeria’s 4 cellphone service providers signed an agreement that set the fine at 200,000 naira (US$1,000) for each unregulated SIM card in 2011. He said MTN was the only company not to comply and that the 5.2 million cards were actually deactivated by the regulator. Until a couple of years ago, people could buy SIM cards without producing identity documents. The regulations are aimed at helping law enforcement and security forces to track criminals.
Ojobo even said “there is an orchestration to try to blackmail the regulator,” without offering details. “MTN should operate in the rule of law – the same rule of law that protects – investment,” he told reporters. He added that in South Africa, MTN has ensured 98 percent compliance in registering its SIM card holders.
In Johannesburg, South Africa, MTN spokesman Chris Maroleng said the company is above board in its dealings with Nigeria. “MTN is committed to engaging with authorities in Nigeria – adhering to the highest principles of sound corporate governance and transparency,” Maroleng said.
South Africa and Nigeria are fierce financial rivals. The high-stakes spat has become political, with Nigerian Vice President Yemi Osinbajo, a corporate lawyer, heading the Nigerian team negotiating with MTN executives from South Africa.
Despite the furor, the regulating authority in Nigeria agreed this week to extend MTN Nigeria’s operating license until 2021 for US$94.2 million. MTN shares gained 5 percent on Tuesday’s news after losing nearly a quarter of their value over the fine.
MTN operates in 22 countries in Africa and the Middle East and reports having 233 million subscribers, more than 60 million of them in Nigeria.
Source: Associated Press