FOR MTN, Africa’s largest telecommunications firm, the last three weeks will
remain the most turbulent time in its history.
Established in 1994 in Johannesburg,
South Africa, MTN has come under fire
in Nigeria, a major arm of the
telecommunications firm.
Apart from having its shares
plummeted severely on the
Johannesburg Stock Exchange (JSE),
which as at last week, declined to
about 25 per cent since the fine was
made public weeks back, valuing the
company at 289 billion rand ($20.4
billion), the issue last week also
claimed its first casualty, in the person
of the Chief Executive Officer, Sifiso
Dabengwa, who tendered his
resignation letter last Monday for
failing to mediate effectively with the
Nigerian authority, according to
sources.
Nigeria accounts for 37 per cent of
revenues for MTN, which operates in
more than 20 countries in Africa and
the Middle East. According to analysts,
with Nigeria been the major ‘cash cow’
for the Group, it is onus on the
management to abide by the rules and
regulations governing the activities in
the country, especially one, which MTN
is a signatory to.
Indeed, after several warnings from
the Nigerian Communications
Commission (NCC) to
telecommunications operators in the
country including MTN Nigeria,
Globacom, Airtel and Etisalat that they
should disconnect defective
Subscribers Identification Modules
(SIM) cards, while others complied,
NCC claimed that it still found about
5.1 million subscribers on the MTN
network having pre-registered SIMs
cards and incomplete registration
details.
This led to the commission imposing a
N1.04 trillion ($5.2 billion) fine on the
telecommunications firm for the
defective SIMs at the cost of N200, 000
each.
Before this $5.2 billion fine, MTN, like
other operators were in August
slammed with N120.4 million fine.
The telecommunications firm was
asked to pay N102.2 million as fine,
followed by Globacom, which was
fined N7.4 million. Etisalat paid N7
million and Airtel got of N3.8 million
for SIM cards contraventions.
Reprieve however, came the way of
MTN on Monday, following the
extension granted it by the NCC
without prejudice to the fine after the
deadline period (November 16) lapsed
because of the on-going negotiations
between Nigeria and the South African
delegation from MTN.
The sanction indeed and expectedly
generated all manner of reactions,
from the legitimate to the ludicrous
with the NCC accused of being too
harsh and being anti-business
What regulations say about SIM
registration
The NCC said it did explore the
Nigerian Communications Commission
(Registration of Telephone
Subscribers) Regulation, 2011 before it
struck. It stressed that MTN also must
have seen and owned a copy of it.
On November 7, 2011, the 12-page
regulation was published in the
Federal Government of Nigeria Official
Gazette No 101 Vol.
Indeed this four-year old regulation,
which was actually signed by the
former Executive Vice Chairman of
NCC, Dr. Eugene Juwah, provided the
framework for the registration of
subscribers of mobile phone users in
Nigeria.
Pages 11 and 12 of the NCC
Registration of Telephone Subscribers
Regulations, the regulation sets out
penalties for default in sections 19 and
20.
Section 12 (1, 2, 3) informed that upon
the commencement of these
regulations, licensees shall only
provide new subscribers with
subscription mediums enabled for
limited access to their network
services and such limited access shall
last for the duration of the activation
window.
Justifying the sanction, Section 20 (1)
of the Regulation states that: “any
licensee who activates or fails to
deactivate a subscription medium in
violation of any provision of these
Regulations is liable to a penalty of
N200, 000 for each unregistered but
activated subscription medium.”
Given how regulations are made in
regulated sectors, it is inconceivable
that MTN Nigeria was not aware of the
regulation, the penalty for default, and
the implication of default for its
business.
Frankly speaking, operators in
regulated environments have
enormous legal and other resources to
shape the outcome of regulations and
analyse the risk to their operations.
According to a telecommunications
expert, Kehinde Aluko, why then is the
NCC being chided for taking the
initiative to curb unacceptable
corporate behaviour whereas MTN is
getting sympathy for failing to abide
by the rulebooks?
Divergent views continues to trail
sanction
Aluko said some people have actually
claimed the fine to be unfair because
it makes up 1/4 of MTN’s total asset
and may as a result push them out of
business.
But my question is: “Should the
fairness of the fine meted out be based
on MTN’s profit margins and its ability
to pay or the magnitude of the
problem being addressed – which in
this case is: ending terrorism and
other criminal acts. I believe the latter
should be the litmus test for fairness. “
According to him, if you are familiar
with corporate behaviour in Africa as
compared to the rest of the world, you
will know that corporations have
constantly exploited weak regulatory
bodies to get away with a lot that they
wouldn’t dare attempt in the Global
West.
Speaking to The Guardian, a former
President, Institute of Software
Practitioners of Nigeria (ISPON), Chris
Uwaje said if that is the Law of the
land, then compliance is demanded.
“Alternatively, they can go to court to
test the interpretation of the law.
There is always the risk potential in
any business: a good example is the
fine of over $8 billion to British
Petroleum on the Oil Spill Saga and
recently on Volkswagen of Germany
for the technological (software)
manipulation of the technical
performance of VW Cars in the US
market.
