MTN ‘sailed too close to the wind’ in Nigeria

2015-11-03 07:30 - Gareth van Zyl
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MTN logo. (Duncan Alfreds, Fin24)

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Johannesburg - Africa’s biggest mobile network MTN [JSE:MTN] could have avoided a $5.2bn fine in Nigeria, but regulators in that country have also been harsh on the company.

This is according to Dobek Pater who is a director and analyst at telecoms, IT and media research firm Africa Analysis.

On October 26, mobile network MTN announced that it was fined $5.2bn by the Nigerian Communications Commission (NCC) for failing to disconnect up to five million unregistered SIM cards in that country.

READ: MTN 'engaging' Nigerian authorities on $5.2bn fine 

The record fine came after Nigeria kick-started its SIM card registration process in 2013. This registration process in Nigeria was implemented to curb illegal activities with the use of unregistered SIM cards.

MTN is the biggest mobile network in Nigeria with an estimated 60 million subscribers.

“It’s up to the networks to register SIM cards,” Pater told Fin24 regarding the process in Nigeria.

“The registration wasn't followed through,” commented Pater on the massive fine.

Furthermore, MTN has had to comply with the NCC in Nigeria to keep its licence, which is also up for renewal in 2016.

What are your thoughts on MTN's fine in Nigeria? Tell us by clicking here.

But Pater further pointed out that MTN could have also lost up to $25m if it disconnected the five million unregistered subscribers in Nigeria. This is because the average revenue per user of an MTN Nigeria subscriber is $5, said Pater.

“They (MTN) tried to sail too close to the wind,” added Pater.

But Pater said that regulators in Nigeria could be seeking to make an example of MTN, especially in light of former Nigerian finance minister Olu Falae having been allegedly kidnapped by a group of herdsmen that used unregistered MTN SIM cards.

“If you get on the wrong side of people with influence, you risk getting your marching orders in Nigeria,” Pater told Fin24.

Because MTN is the biggest of Nigeria’s four mobile networks, it’s also been under the spotlight of the NCC for not abusing its market dominance, said Pater.

The NCC has also previously fined MTN, Airtel, Glo and Etisalat in Nigeria for issues such as quality of network services in the country.

Pater, nevertheless, said he expected MTN to reach a negotiation with the NCC over the latest $5.2bn fine.

Meanwhile, MTN said on Monday afternoon that it was having discussions with the NCC over the fine.

This announcement came after the Johannesburg Stock Exchange (JSE) briefly suspended trade in MTN on Monday as unconfirmed reports emerged in Nigeria about the mobile network having reportedly decided to pay the multi-billion dollar fine.

READ: JSE suspends trading in MTN shares

MTN is also facing an investigation by the JSE into how the mobile network announced its Nigerian fine on SENS on Monday October 26.

MTN is Africa's biggest mobile network with over 230 million subscribers in 22 countries across the Middle East and Africa.

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