on MTN

Ok let’s talk about MTN,

Ok first the facts.

MTN Nigerian operations are huge!

MTN is Africa’s largest mobile company, from an investment of $285 million in Nigeria, MTN made $3.9b in 2014 from Nigeria. MTN paid N176bn in taxes to Nigeria in 2014, and cumulatively from inception has paid Nigeria, N1.3t in taxes.

Apart for taxes, MTN spends a lot to sustain its operations in Nigeria eg in 2104, it spent N30b on diesel….

MTN, which has about 233 million customers in 22 countries in the Middle East and Africa, it makes 37% of its income from Nigeria, Nigeria is its cash cow. MTN Nigeria is the market leader with more than 62.5 million customers.

Ok let’s hear NCC side of the case.

MTN Group Ltd. was fined $5.2 billion by Nigeria’s telecommunications regulator NCC for failing to comply with an order to disconnect customers with unregistered phone cards within time. The fine is, more than 20 percent of the MTN market value,

NCC in its regulation was very very specific. Section 19 of the SIM Registration Regulations …” Any licensee who activates a sim card in violation of Section 5 or who fails to deactivate a SIM card in accordance with section 7 shall be deemed to be in material breach of these regulations and shall be liable to a fine of N200,000.00 per sim card.”….note the fine was specified in advance…

The NCC said MTN was discovered to be harboring about 5.2 million defective SIM cards on its network which it failed to deactivate. The fine is calculated thus as 5.2million unregistered customer subscribers a charge of 200,000 naira ($1,004) for each.

It gets worse for MTN

“NCC indicated that it carried out an independent investigation across networks and discovered that MTN only made a partial attempt to bar unregistered subscribers in selected areas over a few days in September 2015, whereas other operators fully complied and reconciled their deactivations with the invalid registrations shared by the NCC up to four weeks earlier.”

The NCC continues “These SIM cards with invalid registrations pose a grave security risk to the country, because their registration information cannot be used to successfully identify their owners in the event of a security breach involving any of these SIM cards.

But let’s hear the other side

MTN Defense…

MTN says they were NOT fined for having and disconnecting 5,2m defective lines but for failing to do so in 7 days.

They said they have disconnected the SIMs but AFTER seven days.

MTN implies the initial database given was wrong, and that MTN needed to validate the database. MTN says they made a representation to the NCC in August that because of their size of their subscriber base they could not manually validate within 7 days. They recommended a staggered approach, deactivate numbers without biometric data immediately, and other deactivation over 30 days.

MTN indicates that “We also informed NCC of our concerns about the feasibility of one week to carry out the review exercise given the size of our network and the possible severe disruption which the seven-day ultimatum could pose to the social and economic lives of Nigerians.

“As a way out, we recommended a staggered process that entailed the deactivation of active SIMs without biometric data immediately, and deactivation of active SIMs with incomplete personal information in one month.

In effect MTN says it complied but not fast enough….

My own view.

We have to look at MTN intent here, why did MTN not deactivate immediately?

This can be gleaned again from media reports “MTN primary concern at all times was to ensure that it minimized any severe disruption to the lives of Nigerians, as a negative public backlash could have untold effects on the agreed public enlightenment campaign.”

.in effect MTN put the discomfort of Nigerians ahead of national security.

Once that NCC memo was released, it constituted a contingent liability to MTN, their response did not indicate they recognized this liability would crystalize. When did MTN realize they has 5.2m unregistered SIMs in their database? Was there any high level representation done by MTN to the NCC, in writing? Did they copy the Executive? Did they inform their head office?

PIC is the largest fund manager in Africa, PIC, which own 16% of MTN has said it expects investee companies to abide by local rules and regulations of host nations

To my mind, MTN knew the rules, and did the “crime” so they have to pay the fine

However MTN paying is really step 1, step 2 is winning the perception war.

On all the financial wires, the conclusion is that Nigerian is imposing a heavy fine on MTN and multinationals because Nigeria is broke. Bloomberg goes further to state the fines show “Nigeria” is under fiscal stress….

The FGN should not allow this narrative to stand, it must be expansive in communicating MTN actions were inimical to National Security hence the fine

It’s also interesting to see Nigeria in support if this fine, I pray this sentiments will continue when the FIRS rolls out its sanctions on Nigerians who have failed to file honest and proper tax returns.