Business & Finance

MTN Fine: Towards Harmonious Telecom Environment

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Last week, the Senate invited the CEO of MTN Nigeria, Mr Ferdinand Moolman; Minister of Communications, Barrister Adebayo Shittu; EVC of Nigerian Communications Commission (NCC), Prof Umaru Danbatta and officials of the Ministry of Justice to find an amicable resolution on the lingering MTN Nigeria fine which has put the telecommunications regulator and the operator on the front burner.

In the last weeks efforts have been made to resolve the matter with MTN making good faith payment of N50 billion to the Federal Government to show that it is committed to resolving the dispute. Now what remains is for all the parties involved to find a middle ground and settle the matter once and for all.

MTN is learning the hard way not to joke with regulatory directives and guidelines. It has acknowledged that it made a mistake by disregarding the warnings of the NCC and the security agencies to deactivate 5.2 million SIM card on its network which has cost it so much in terms of its brand image, market value as well as fine of N780 billion which it is battling to resolve.

By writing a letter of leniency to NCC, pledging not to disregard future directives and guidelines as well as appealing for reduction in the fine, it shows that it is now ready to be a ‘good boy’. It is on record that they fine have brought lots of nightmares to MTN since October last year.

The fine has significantly reduced the value of MTN shares listed on the Johannesburg Stock Exchange (JSE) by about 22 per cent and has seen the downgrading of MTN’s debt rating by international rating agencies. On December 14, 2015, Fitch Ratings downgraded MTN Group’s Long term Issuer Default Rating (IDR) to ‘BBB ‘.

The downgrade follows the recent rating action on South Africa’s sovereign ratings, which is considered together with the impact from recent announcements from MTN regarding the fine from NCC. Both of these are assessed to have increased operational risk to MTN from its two key markets.

Fitch said “the fine and challenges in Nigerian dividend repatriation also evidences higher operational/regulatory risk in these regions. We believe these changes result in increased credit risk to MTN given its reliance on emerging markets, and its exposure to South Africa and Nigeria, in particular.”

Although the Federal Government has reiterated that it has nothing personal against MTN Nigeria with respect to the fine imposed on it by NCC, it would be better that the authorities put into cognizance the investments the telecom operator has made in the country and reduce the fine to an amount that would not bankrupt the telecom company.

At the moment, MTN Nigeria remains the most profitable telecom operator in the country and it has diversified its footprints into subsea fibre optic cables, Internet service provision, datacentre as well as financial inclusion solutions, creating not millions of direct and indirect jobs as well as supporting thousands of micro, small and medium enterprises (MSMEs) in the country.

The chief executive officer of MTN, Ferdi Moolman, speaking to LEADERSHIP at the weekend while reaffirming that confidential negotiations are still very much ongoing with the authorities to achieve an amicable resolution of the matter he said “We have invested more than US$16bn in Nigeria over the past 15 years and contribute an estimated 4.5 per cent to GDP.

“We are proud of the fact that we are an integral part of the Nigerian economic and social fabric.

“Compliance with regulatory requirements remains our focus. We remain committed to Nigeria and will continue to invest in the country through our operations and the MTN Foundation. We have put in place the operating and management structures, as well as made critical investments; to ensure that we improve our competitiveness in 2016” he said.

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One good coming out this is that the Federal Government is disposed to a quick resolution of the imbroglio. According to Minister for Communication, Barrister Adebayo Shittu, the government will do everything possible to encourage and develop innovative ideas from MTN Nigeria and indeed other telecommunication companies in Nigeria to grow the economy.

Shittu who visited MTN Nigeria head office in Lagos to reiterate government support to telecom operators said “there is no doubt that over the last couple of months we have had issues; those issues are normal in relationships like this. I want to assure you that the Nigerian government has nothing personal against MTN.

“As a matter of fact, as a person, I consider MTN as a first and foremost a Nigerian company. Nigeria Company in the sense that it is a company registered in Nigeria like any other company. In fact, the government appreciates the contributions MTN Nigeria is making to the GDP, generating employment and putting smiles on the faces of Nigerian.

“I believe that MTN appreciates the fact that Nigerians love MTN. More than half of people who patronize GSM operators in Nigeria are your customers and I think that is an appreciation which must be acknowledged” Shittu, said.  Also, stakeholders in the telecom industry have pleaded for quick resolution and reduction in the fine for MTN Nigeria.

President of National Association of Telecommunications Subscribers (NATCOMS), Chief Deolu Ogunbanjo, said MTN has demonstrated some goodwill by withdrawing the case from the court and paying N50 billion. “The NCC and indeed the Federal Government should now show some magnanimity in accepting the payment in good faith.

“This will ensure that MTN continues to be in business in Nigeria. Our fines must be corrective and not as penal as to close down foreign investment interests in Nigeria. Nigerian regulators must not be excessively harsh in order not to send wrong signals to investors interested in Nigeria,” he said.

President, Association of Telecoms Companies of Nigeria, Engr. Lanre Ajayi, described the ongoing negotiation as a “step forward” in the engagement between MTN and the Nigerian authorities. “This development shows we are moving forward on resolving the issue. I believe it is a product of negotiation and they must have put a lot of things in place before coming up with a reduction.”

Mr Oluwole Babatope, telecom and networking research analyst with IDC West Africa said “The telecommunications vertical in Nigeria has consistently increased its contribution to GDP over recent years, rising from about two per cent in 2006 to eight per cent in 2013,” as he pleaded that government should soften its stance in order not harm the industry.

“As such, it is in the government’s interests to create and implement policies that provide an enabling environment for communication service providers. Indeed, laws should be established that protect telecommunications infrastructure and prosecute the vandals and individuals who sabotage telecom operations in the country”, he added.

On the bilateral level, it is hoped that the MTN fine does not stretch Nigeria’s fragile relationship with South Africa. Last week, the President of South Africa, Jacob Zuma made a state visit to Nigeria and it is believed that the MTN fine was one of the issues discussed privately with President Muhammadu Buhari.

It is hoped that lessons will be learnt especially by MTN Nigeria and the resolution will be used to build a more virile telecommunications industry where harmony exist between regulator, operators and other stakeholders.

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