No Reprieve for MTN as $5.2bn Fine Stays –NCC

As deadline for the payment of $5.2billion fine elapsed yesterday, reprieve seems far from MTN Nigeria as its regulator, the Nigerian Communications Commission (NCC), is still standing by the penalty despite ongoing negotiation.
NCC’s spokesman, Tony Ojobo, said in a statement on Monday that the regulator was looking into MTN’s plea for leniency but the fine remained because MTN has admitted to breaking the law.“The fine remains but the appeal and other engagements with MTN may affect the payment deadline,” Ojobo said.
He explained that it was not only MTN that was sanctioned , but also all other mobile phone companies , saying that on August 4, 2015, at a meeting of all the representatives of the Mobile Network Operators (MNO) with NCC, major security challenges through preregistered, unregistered and improperly registered SIM cards topped the agenda after which Operators were given the ultimatum to deactivate such within seven days.
On August 14, 2015, three days after the ultimatum expired, NCC carried out a network audit. But while other operators complied with the directive to deactivate the improperly registered SIM cards, MTN showed no sign of compliance at all.
“Please recall that four operators; MTN, Airtel, Globacom and Etisalat, were sanctioned in August for non-compliance with the directive to deactivate the improperly registered SIM cards. MTN got a fine of N102.2million, Globacom N7.4million, Etisalat N7million and Airtel N3.8million fine. Others complied while MTN flouted the fine.
“Based on the report of the compliance Audit Team, an Enforcement Team which visited MTN from September 2 – 4, 2015 wherein MTN admitted that the team confirmed that 5.2million improperly registered SIM cards were still left active on their network; hence, a contravention of the regulations was established
NCC had given MTN until midnight on Monday to pay the fine that has pummeled its stock price and prompted the resignation of its chief executive, Sofiso Dabengwa.
The telecom firm, which has asked its former CEO, Phuthuma Nhleko, to take charge for up to six months, has been in talks with high-ranking officials from the NCC and the presidency for the past two weeks in a bid to reduce the fine.
“Shareholders are advised that the Nigerian authorities have, without prejudice, agreed that the imposed fine will not be payable until the negotiations have been concluded,” MTN said in a statement earlier on Monday.
Shares in MTN, which have dropped by about 20 per cent at the Johannesburg stock Exchange (JSE) since the fine was first announced on October 26, ended 0.28 per cent lower at 145.25 rand.
“The fact that they have pushed back the deadline shows that they are seriously negotiating and perhaps we could see a reprieve,” said Imara SP Reid’s analyst, Sibonginkosi Nyanga, in Johannesburg.
Nhleko, who led the company for nine years before stepping down in 2011, has met with authorities to continue the discussions, MTN said.
“These discussions include matters of non-compliance and the remedial measures that may have to be adopted to address this,” the company said.
The fine, which is based on $1,000 for each unregistered SIM card, amounts to more than the past two years of MTN profits.
Some analysts have said the size of the fine risked damaging Nigeria’s efforts to shake off its image as a risky frontier market for international investors. Others said the fine showed Nigerian regulators were keen to enforce the law.
Newly appointed Minister of Communications, Adebayo Shittu, told foreign news service last week that Africa’s biggest economy, which is also MTN biggest market by sales, did not want MTN “to die” from the fine.
NCC added the fine was the second for MTN in two months. A penalty of 102.2 million naira ($513,697) was imposed after telephone operators were given a seven-day ultimatum to deactivate all unregistered and improperly registered SIM cards.