Nigeria suspends talks to settle MTN fine

… As MTN raises expenditure target in Nigeria to $1b

 Nigeria has suspended talks with the MTN Group over the record $3.9 billion (R60 billion) fine, according to Bloomberg.

On Sunday, Bloomberg reported talks have been suspended indefinitely while the country’s House of Representatives completes an investigation into the size of the penalty and how it was delivered.

Spokesperson of Nigeria’s ministry of communications, Victor Oluwadamilare, told Bloomberg the lawmakers “have set up a committee to investigate the MTN saga and they are still on it”. “Until they are through with it, nothing can be done,” he said.

“The federal government, the Nigerian Communications Commission (NCC) and the ministry of communications can do nothing about the MTN case until the committee concludes its thorough investigation,” Oluwadamilare told Bloomberg. “There’s no point dealing with a particular organisation from different fronts. It would be counter-productive.”

Africa’s largest mobile operator was slapped with a $5.2 billion (R80 billion) penalty by the NCC last October for failing to disconnect 5.1 million unregistered SIM cards on its Nigerian network. In early December, the fine was reduced by 25% to $3.9 billion.

The MTN group has 232.5 million subscribers across 22 countries in Africa and the Middle East − 61.3 million of which are in Nigeria.

In another development, MTN Group has raised its Nigeria capital expenditure (Capex) target for 2016 to about $1 billion from $700 million, despite the outstanding $3.4 billion fine issued on the company by the Nigerian Communications Commission (NCC).

Krishna Chetty, acting MTN South Africa chief technology officer disclosed recently this in Johannesburg, adding that the increased capex spending by MTN may be used to improve its network-service quality and rolling out a 4G offering.

MTN is Nigeria’s largest telecommunications network with about 60 million subscribers. MTN Nigeria had initially withdrawn its court case challenging the NCC’s authority to issue such a huge amount of fine and made a N50 billion payment in February 2016 to meet the government’s condition for out of court settlement.

Currently negotiations between MTN Nigeria and the Federal Government are ongoing and some industry analysts said this move by MTN to increase its capital expenditure in the country despite the outstanding amount to be paid as fine, suggests that the ongoing negotiations may yield positive fruit.

Ferdi Moolman, CEO MTN Nigeria, said that the company is positioned for growth and investing in different things, especially broadband services.

MTN Nigeria recently acquired Visafone, the last surviving code division multiple access (CDMA) in Nigeria.

“We have started looking at 4G and Visafone had frequency which allows us to do this extension, so if we want to start rolling out 4G and we want to take better services to the public we had to acquire a platform that will enable us do this,” Moolman said.

“We see huge potential and growth in Nigeria and MTN wants to be part of that growth. We would like to take this company from just a telco network to something that is a people’s company,” he said.

The NCC had initially issued MTN a fine of N1.04 trillion ($5.2), relating to the timing of disconnection of the 5.1 million active MTN subscribers with improperly registered SIM cards calculated at N200, 000 for each subscriber.

Monday, 16, November 2015, was set as the deadline for payment of the fine. However, MTN pleaded for leniency and the deadline date was extended until negotiations had been concluded.

On December 4, 2015, MTN Group corporate affairs issued a release stating that although the NCC had initially sent MTN a letter that it had taken the decision to reduce the fine imposed on the MTN Nigerian business from the original N1,040,000,000,000 (One trillion, forty billion Naira) to 674 billion Naira, a reduction of 35% of the original fine which had to be paid by December, 31, 2015, a second letter which was stated to supersede the first letter was sent which informed the Company that the fine had actually been reduced by 25% to 780 billion Naira and not by 35% to 674 billion Naira, as was stated in the first Letter. The payment date remained the same.

MTN met the Federal government’s condition to pay a substantial amount of the fine before commencing out of court settlement by paying N50 billion and the announcement of increased CAPEX for this year shows that negotiations are yielding positive results and not stopping the growth of MTN in Nigeria after all.