Rwanda fines MTN R111.5m
Breach of compliance cited
AFRICA’S largest telecommunications provider MTN has landed itself in more trouble on the continent, with the Rwandan authorities yesterday saying they would fine the company $8.5 million (R111.55m) for non-compliance.
The Johannesburg-based company was slapped with a notice by the Rwanda Utilities Regulatory Authority (Rura) for non-compliance, with directives prohibiting its local unit from hosting its information technology hub in neighbouring Uganda.
“The fine relates to non-compliance with the directives issued by the regulator prohibiting the inclusion of MTN Rwanda in the MTN South and East Africa IT hub based in Uganda,” MTN said.
Last year, MTN which paid a hefty $1 billion fine to the Nigerian regulator for missing the deadline for disconnecting 5 million unregistered SIM cards, said it had been in talks with the regulator on this matter over the past four months.
“MTN Rwanda is studying the official notification and will continue to engage with the regulator on this matter,” the company said.
Rura said yesterday that MTN Rwanda had contravened an enforcement notice and directives issued by the regulator against hosting its IT services outside the country.
“By doing so, MTN Rwanda breached its licence obligations requiring it to comply with all applicable laws, regulations and any other regulatory instruments issued by the competent authority,” it said.
Rura said MTN Rwanda had admitted to the breach.
“On May 4, 2017, the regulatory board of Rura conducted a hearing session in which MTN Rwanda was informed of the breach of its license obligations and given the opportunity to be heard, whereby MTN Rwanda admitted the above-mentioned breach,” read the statement.
The fine stems from Rura directives to MTN Rwanda concerning the MTN ITC hub in Uganda issued between January 28, 2011, and February 7, 2011, Rura’s website stated.
The regulator said MTN Rwanda was instructed to exclude itself from all aspects of the regional ITC-shared services initiative and warned that failure to do so would be considered a serious breach of its licence obligations.
Rura said the breach would lead to appropriate measures in accordance with the applicable laws in that country.
Despite the directives, MTN Rwanda allegedly implemented an interim phase for the hub from September 2012 and operationalised the ITC services management fully in October 2014 under its MTN hub in Uganda.
Brian Neilson, director at BMI-TechKnowledge Group, said that the fine was not insurmountable compared to the $1bn fine in Nigeria.
“MTN will pay the fine of $8.5m easily and it does not sound like major news, considering that the company could afford to pay the $1bn in Nigeria,” Neilson added.
“I have always maintained that the Nigerian authorities were way too extreme and there was no justification for that fine.”
Last October, the Central Bank of Nigeria instructed the country’s banks to suspend any remittance of MTN dividends until further notice.
At the time, the authorities also accused the company of illegally repatriating $14bn from the country illegally over 10 years.
In March, MTN appointed Rob Shuter as its new chief executive, as it grappled with weak growth in some of its markets that have seen the company’s first ever annual loss reported last year.
Shuter, who has extensive experience in the telecoms sector in both Africa and Europe as well as financial services, earlier this month said that the company remained committed to major investments in its biggest markets in Nigeria, South Africa and Iran.
MTN closed 0.57 percent weaker on the JSE yesterday at R121.30.