MTN fine ‘an investment concern’
TELECOMMUNICATIONS and Postal Services Minister Siyabonga Cwele is concerned that Nigeria’s reluctance to back down from a punitive fine imposed on cellphone giant MTN could affect investor confidence in Africa.
“Of course, the issue of compliance of laws is very critical but also the issue of investment climate is very important for Africa, for all of us in Africa, that we should be seen to be investment-friendly,” Cwele said on Thursday.
Nigeria fined MTN for failing to disconnect five million unregistered sim cards despite repeated warnings.
The Nigerian Communications Commission’s handling of the matter has kept investors on tenterhooks.
In a bizarre twist, the NCC reduced the initial $5.2-billion fine by 35% to $3.4-billion on Wednesday, which had to be paid by December 31. But it revised the reduction in the fine to 25% in a second letter to MTN on Thursday and blamed the change on a typing error.
“There was a typo. The reduction should have been 25%. We saw the mistake and had to fix it,” NCC spokesman Tony Ojobo said on Friday.
The change inflated the fine to $3.9-billion. MTN said it was “carefully considering” both letters. Executive chairman Phuthuma Nhleko was in Nigeria this week to engage with authorities before MTN took a decision on the new fine.
But MTN is said to be resisting the latest fine, which it still considered severe, according to Bloomberg sources.
The matter was set to feature in discussions between President Jacob Zuma and Nigerian President Muhammadu Buhari on the sidelines of the Forum on China-Africa Co-operation summit that started on Friday.
Cwele said that although there had been meetings with MTN, the company had not officially requested government intervention. “My understanding is that they’ve been negotiating. I’m encouraged by negotiations . . . that they are producing results.
“If a child has done something wrong we don’t normally kill a child. We counsel a child not to do wrong things again. That should be the approach, because investment is very hard in Africa including [for] us.
“People normally have this negativity about Africa. I’m talking about other investors who may be coming from outside the continent,” Cwele said.
Although the government could not interfere in noncompliance with the laws of other countries, “everyone agreed the fine is a little bit enormous. I’m sure even the Nigerians agree it’s enormous. That’s why they are revising it.”
MTN’s share price shed more than 6% this week. It closed 3% lower on R135.74.
John Ashbourne, Africa economist at Capital Economics, said: “The whole thing is shambolic. The size of the original fine was surprising. It’s even worse that they’re coming up with numbers on the fly, inaccurately.”
The initial fine of $5.2-billion was more than MTN’s total revenue for Nigeria last year and the equivalent of 37% of the group’s turnover.
“What they need is big, nonoil companies investing in Nigeria. MTN’s an example. Independent of whether or not MTN should actually pay a fine, the way they’ve handled it has been ludicrous,” Ashbourne said.
Cwele said the government would continue to encourage South African companies to invest on the continent, including Telkom.
“That will be a sad day if companies stop investing in Africa. Africa needs the investment.
“If there are issues, let them be discussed over the table and resolved over the table. That will be the thing which will assist the investment climate in Africa,” he said.