MTN ‘correct’ to dispute Nigeria fine
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.