N780bn Fine: NCC Lifts Suspension On MTN

Nigerian Communications Commission (NCC) yesterday lifted the suspension of regulatory service on MTN Nigeria in October 2015 over its default in the deactivation o of 5.2 million incomplete subscriber identification module (SIM) cards on its network.
 LEADERSHIP learnt from a top source at MTN Nigeria that the telecom regulator’s move came as relief to Nigeria’s largest mobile operator who has been making efforts to resolve the N780 billion fine placed on it. NCC sanctioned MTN Nigeria for accumulating over 28 separate and proven infractions.
According to the official, “NCC has today (yesterday) written to us that they have lifted the suspension of regulatory service to us.” This means that the regulator has restored cordial relations and with MTN and the operator could receive certain benefits that were denied it because of the regulatory suspension of service.
The source said the operator would issue a press statement on it. Efforts to speak to Mr. Tony Ojobo, Director of Public Affairs, and NCC proved abortive as his phone line was not answered. Another staff said the corporate affairs heads at NCC were in a crucial meeting.
When LEADERSHIP broke the story on October 26, 2015, it reported that “MTN’s persistent violations have forced the NCC to impose the unprecedented sanction of suspending all regulatory services to MTN following its accumulation of over 28 separate and proven infractions.”  
According to an NCC document exclusively cited by LEADERSHIP, NCC stated that “MTN’s non-compliance with the deactivation directive is unfortunately not an isolated incident. It needs to be seen in the context of a general pattern of non-compliance, with regulatory directives that actually predates the current SIM registration infractions.”
In the NCC quarterly compliance enforcement report for Q2 2015, out of the six sanctions imposed on operators for various acts on non-compliance, MTN was involved and sanctioned for four separate infractions, the NCC document stated.
Other infractions committed include non compliance of MTN with the restriction on promotions imposed on mobile operators on November 8, 2012 in an effort to address persistent Quality of Service issues within the industry; failure to comply with NCC’s Determination of Dominance 2013; Violation of pricing obligations under the 2013 Dominance Determination for MTN Virtual Top Up plus.
NCC fined MTN Nigeria N1.04 trillion ($5.2bn) which was later reduced by 25 per cent to N780 billion in December last year. MTN later wrote a letter to NCC pleading for leniency, pledging not to disregard future directives and guidelines as well as appealing for reduction in the fine.
MTN in February issued a profit warning that it expects about 20 per cent profit decline from its Nigerian operation.  MTN had on March 5, 2015 stated in its full year 2015 financial results that its Nigerian operation in particular experienced a very challenging year, weak economic conditions and the limited availability of US dollars contributed to a lower-than-expected performance.
It stated that “Heightened regulatory pressure also severely impacted MTN Nigeria. This was particularly evident in the suspension of regulatory services and the subscriber registration requirements, which meant that MTN had to disconnect 6.7 million subscribers. MTN Nigeria is working hard to complete the registration process in line with the NCC’s requirements.”
On 24 February, MTN Nigeria made a without prejudice good faith payment of N50 billion ($250 million) to the Federal Government of Nigeria in relation to the NCC fine relating to the late disconnection of subscribers, on the basis that this would be applied towards a settlement.
MTN Nigeria also agreed to withdraw the matter from the Federal High Court while negotiations with the regulatory authorities are ongoing. It is on record that they fine have brought lots of nightmares to MTN since October last year. It has significantly reduced the value of MTN shares listed on the Johannesburg Stock Exchange (JSE) by about 22 per cent.
 It has also seen to the downgrading of MTN’s debt rating by international rating agencies, Moody’s and Fitch. On December 14, 2015, Fitch Ratings downgraded MTN Group’s Long term Issuer Default Rating (IDR) to ‘BBB ‘.
According to Fitch “the fine and challenges in Nigerian dividend repatriation also evidences higher operational/regulatory risk in these regions. We believe these changes result in increased credit risk to MTN given its reliance on emerging markets, and its exposure to South Africa and Nigeria, in particular.”
In the period of the fine, MTN Nigeria invested $94 million in renewing its 2G licenses. It also concluded the acquisition of Visafone Communications 4G spectrum in order to roll out 4G/LTE network service. MTN also acquired digital TV spectrum from National Broadcasting Commission (NBC).
CEO of MTN, Ferdi Moolman, has stated that confidential negotiations are still very much ongoing with the authorities to achieve an amicable resolution.
Ferdi Moolman, CEO of MTN Nigeria said “Compliance with regulatory requirements remains our focus. We remain committed to Nigeria and will continue to invest in the country through our operations and the MTN Foundation. We have put in place the operating and management structures, as well as made critical investments; to ensure that we improve our competitiveness in 2016” he said.

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