MTN ‘cor­rect’ to dis­pute Nige­ria fine

CityPress - - Busi­ness - XOLANI MBAN­JWA xolani.mban­jwa@city­press.co.za

The de­ci­sion by MTN to chal­lenge the Nige­rian Com­mu­ni­ca­tions Com­mis­sion in court over a $3.9 bil­lion (R59 bil­lion) fine was in­evitable and nec­es­sary, said Arthur Gold­stuck, a telecom­mu­ni­ca­tions ex­pert.

Africa’s largest mo­bile op­er­a­tor re­vealed on Thurs­day that it had in­structed lawyers to seek “ap­pro­pri­ate” re­lief through the Fed­eral High Court in La­gos af­ter re­ceiv­ing le­gal ad­vice on the fine just weeks af­ter it man­aged to have the fine slashed from $5.2 bil­lion to $3.9 bil­lion. The fine was im­posed af­ter MTN failed to dis­con­nect 5.1 mil­lion un­reg­is­tered sub­scribers in Au­gust and Septem­ber.

Gold­stuck said while the de­ci­sion was the right one to make be­cause this is the big­gest fine by a reg­u­la­tor in the world, MTN risked hav­ing the fine in­creased by the court.

“It’s a nec­es­sary de­ci­sion. It’s not sur­pris­ing, but it’s also risky be­cause they could get a big­ger penalty in court. It’s the big­gest fine in Africa, and Nige­ria has been build­ing up to this kind of fine when you look at the bank­ing reg­u­la­tor and also other telecom­mu­ni­ca­tions fines, but those fines were noth­ing on this scale,” said Gold­stuck, who is the head of World Wide Worx.

MTN, which has in­tro­duced mas­sive changes into its man­age­ment team as a re­sult of the Nige­ria de­ba­cle, said it had thor­oughly and care­fully con­sid­ered “all fac­tors hav­ing a bear­ing on the mat­ter”, in­clud­ing a re­view of the cir­cum­stances lead­ing to the fine.

“MTN Nige­ria, act­ing on le­gal ad­vice, has re­solved that the man­ner of the im­po­si­tion of the fine and the quan­tum thereof is not in ac­cor­dance with the Nige­rian Com­mu­ni­ca­tions Com­mis­sion’s pow­ers un­der the Nige­rian Com­mu­ni­ca­tions Act, and there­fore there are valid grounds upon which to chal­lenge the fine,” it said in a state­ment to share­hold­ers.

Gold­stuck said the as­tro­nom­i­cal cost of the penalty, cou­pled with the loom­ing De­cem­ber 31 dead­line set by the com­mis­sion, could have forced MTN to take the mat­ter to court.

“It was in­evitable that they would chal­lenge the com­mis­sion be­cause the size of the fine is so large, and they must have weighed up the risk of go­ing to court and end­ing up with a big­ger fine or even with reper­cus­sions in terms of their re­la­tion­ship with the com­mis­sion on the one hand,” Gold­stuck said.

“But on the other hand, the as­tro­nom­i­cal costs of the fine and the dam­age it would cause on MTN fi­nan­cially are ob­vi­ously what swayed the de­ci­sion.”

The com­pany said it would con­tinue en­gag­ing Nige­rian au­thor­i­ties to find an “am­i­ca­ble” res­o­lu­tion to the stale­mate over the hefty fine im­posed by the com­mis­sion in Oc­to­ber.

Former MTN Group chief ex­ec­u­tive Si­fiso Dabengwa re­signed in Novem­ber and, ear­lier this month, the com­pany over­hauled its op­er­a­tional struc­ture and re­verted to the struc­ture used when Phuthuma Nh­leko, who has taken over from Dabengwa, was still CEO.

The com­pany ap­pointed for­mer UBS In­vest­ment Bank ex­ec­u­tive Matthew Odgers as the group ex­ec­u­tive for merg­ers and ac­qui­si­tions, while MTN Nige­ria CEO Michael Ikpoki and head of reg­u­la­tory and cor­po­rate af­fairs Ak­in­wale Good­luck quit and were re­placed by Ferdi Mool­man and Amina Oyag­bola, re­spec­tively.

The search for Dabengwa’s re­place­ment, as Nh­leko will only be at the helm for six months, con­tin­ues.

Jy­oti De­sai, who has spent 14 years at MTN, was ap­pointed group chief op­er­at­ing of­fi­cer, while Karl To­ri­ola was ap­pointed vice-pres­i­dent for west and cen­tral Africa. Is­mail Jaroudi was ap­pointed as vice-pres­i­dent of Mid­dle East and north Africa.

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