MTN ask former boss to handle $5.2 bln Nigerian fine

Nigerian analyst condemns MTN Group’s violation of Nigerian laws while calling on the telecoms company to adhere to the regulations of the Nigerian Communications Commission.

LAGOS, NIGERIA (NOVEMBER 9, 2015) (REUTERS) – A Nigerian analyst on Monday (November 9) condemned MTN Group’s violation of Nigerian laws and called on the telecoms company to adhere to the regulations of the Nigerian Communications Commission (NCC).

Africa’s biggest mobile phone company was given a 5.2 billion U.S. dollar penalty by the NCC last month after the South African company failed to cut off users with unregistered SIM cards from its network.

Nigeria has been pushing industry players to verify the identity of their subscribers on worries that unregistered SIM cards were being used for criminal activity in a country facing Islamic militant group Boko Haram’s insurgency.

The fine, which is based on a 1,000 U.S. dollars for each phone line MTN failed to cut off, has left investors, including its biggest shareholder, wondering how the company failed to comply with the law that carried such a heavy penalty.

Economic Analyst Ememanka Onyebuchi says MTN must pay the fine.

“I agree that if the Nigerian government insists on collecting that fine in one fell swoop, it could affect MTN’s commercial…. their financial position, I agree. I also agree that the option of staggered payment be explored, I also agree that if our government in their wisdom decides to review the fine if they agree to exercise their discretion, it is now discretionary to review the fine, fine but we must establish that an infraction of our laws have taken place and action and reaction are equal and opposite. MTN must be made to pay. You know the reason why this…this is a test case for the resolve of our government, companies must sit up not just in telecoms, all over, through out the sectors of our economy where foreign companies operate,” he said.

South Africa’s MTN Group has asked its former head to take temporary charge of Africa’s biggest mobile telecoms company after its chief executive resigned over a 5.2 billion U.S. dollar fine imposed by Nigeria.

Non-executive chairman Phuthuma Nhleko was named executive chairman of MTN for a period of up to six months after Sifiso Dabengwa stepped down as CEO with immediate effect on Monday.

The priority for Nhleko will be trying to get a reduction on the fine demanded by the Nigerian Communications Commission (NCC).

Nigeria, Africa’s most populous nation, is MTN’s largest market and contributes more than a third of its revenues.

MTN said it was continuing talks with authorities in Nigeria over the fine. The NCC penalised MTN last month for failing to cut off users with unregistered SIM cards.

“Big corporations, local giants prefer countries where there are strong laws, this is the truth, the biggest corporations in the world don’t feel comfortable operating in countries where there is legislative laxity and laxity in compliance. These countries, these corporations want to play in countries where laws are taken seriously so it will send a clear message to the international business world that Nigeria is now ready to do serious business,” Onyebuchi added.

Shares in MTN have slid by nearly 20 percent since October 26 when the charge was first reported but traded 2.2 percent higher at 160.93 rand by 1015 GMT after Nhleko’s appointment.

MTN also faces a Johannesburg bourse investigation on the timing of its announcement of the penalty.

Ratings agencies Moody’s and Fitch lowered MTN’s credit rating outlook to “negative” last month flagging the risk of significant cash outflow and the likely damage to the Nigerian business due to lengthy talks.

South Africa’s government has said it was concerned about the fine but said this would not affect relations between the continent’s two biggest economies.