A Record $5.2b/1.4 Tr Naira Fine For MTN By NCC. How About That?

Following its threat to fine non compliant regulators, the Nigerian Communications Commission has reportedly fined MTN which is the largest Telco by subscribers a record 1.4tr Naira/$5.2b/520b KES for failing to deactivate unregistered SIM cards. This fine according to an MTN official has to do with timing of disconnection of 5.1 million lines between August and September. The fine is 200,000 Naira/$1,000/100,000 KES per line. You do the math.

Prof. Umaru Garba Danbatta – Executive Vice Chairman, NCC

In our last piece on this, we thought the NCC fines were lenient but frankly speaking , even almost everyone now agrees this could be unrealistic for an operator that controls about 43% of the entire Nigerian Telecom sector as this could have devastating effects on their operations and the industry in general. This could further have impact on Foreign Direct Investment (FDI) as MTN Nigeria has a parent company based in South Africa. The telecom industry accounted for about 35% of the total FDI into Nigeria in 2014 alone. You can them imagine the economic contributions of the largest operator in that industry to the Nigerian economy.

The MTN Group from South Africa has issued a statement though which was posted in the Guardian. “MTN Nigeria is currently in discussions with the NCC to resolve the matter in recognition of the circumstances that prevailed with regard to these subscribers. We will continue to update shareholders in this regard.” the Chairman of the Association of Licensed telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo in an interview with Guardian also said I believe strongly that there is nothing wrong in a regulator imposing a sanction on erring operator to ensure sanity in the market but when such a regulatory tool is being abused, it calls for alarm. The amount imposed on MTN is just, to say the least, outrageous and monumental. By the time you begin to impose a sanction, whose value is worth more than half of the investment of a telecoms company, I am afraid, this does not send good signals to foreign investors and we need to take cautions.”

That said, one of the allegations against MTN is that it sees itself above the law probably by reason of its dominance. Even its own competitors think regulators give MTN the special kid treatment. For example, everyone knows that security is the first thing of the mind s of everyone who lives in Nigeria. The office of the National Security Adviser and Department of State Security had called an emergency meeting of stakeholders including Telcos (Telecom companies). MTN was reported to have sent low level officials to that “crucial” meeting. A general fine was issued to all operators in August by the way but at that, MTN was fined the highest amount of about 120 million Naira while others like Glo was fined just a little above 7 million Naira.

Nigeria is in need of critical investments in different sectors and should be ready to lead economically and eventually be n engine of economic growth in Africa. Discouraging multinationals from investing is not the way to achieve this. But no operator should be above the law.

Recent figures put the MTN subscriber base at over 62 million but in the year ending 2014, they had 59 million subscribers. This is contrary to views that the Nigerian telecom market is stagnating.