MTN slams Nigerian fine’s ‘real motive’
Budget bail-out behind R78bn sanction, says executive
CELLPHONE operator MTN has resorted to the Nigerian courts to fight its massive fine, claiming it is being made to pay for that country’s economic woes.
MTN announced this week that it would legally challenge the $5.2-billion (about R78-billion) fine imposed on it by the Nigerian Communications Commission in October for failing to verify the identity of 5.1 million of its users.
The telecommunications group’s decision to approach the Nigerian courts was slammed by critics who said it could lead to a hardening of attitudes against South Africanowned businesses in Nigeria.
But a senior MTN executive, who preferred not to be identified as the matter is before the courts, said the company had no option but to legally challenge the fine.
He said Nigeria’s slowing economic growth — a result of low global oil prices — was the real driver of the record fine imposed on MTN.
“It’s not rocket science that the fine could be related to Nigeria’s economic situation.
“The fine in some opinions is actually a balancing number for the very stressed Nigerian budget.”
The $5.2-billion fine constituted almost 25% of Nigeria’s entire budget.
MTN has about 60 million users in Nigeria, which is its biggest market.
Although Nigerian authorities have since reduced the fine to $3.9-billion, MTN said it was still the biggest yet to be levied on a telecommunications company.
“It would be the largest fine ever levied in Nigeria for anything, including over the likes of Shell for polluting the Niger Delta for over 50 years. The maximum fine they have ever paid the Nigerian government was £55-million [about R1.2-billion],” said the MTN insider.
Before this, the highest fine imposed on a cellphone company was the $100-million demanded by US authorities from AT&T.
Nigeria, which is Africa’s most populous country, is experiencing its slowest growth since the turn of the century.
Oil, which makes up about twothirds of government revenue, has plunged more than 63% since July last year.
Last month, MTN asked former CEO Phuthuma Nhleko to act as executive chairman of the group and help the mobile operator with negotiations with the Nigerian authorities.
Nhleko, who up until last month was serving as nonexecutive chairman, has spent recent weeks flying back and forth between South Africa and Nigeria trying to renegotiate the fine with authorities.
SHUTTLE: MTN chairman Phuthuma Nhleko
“Even though a decision has been taken to approach the courts, the negotiations have not stopped. The discussions and engagement with Nigerian insiders will continue and we do believe that we could come to a rational conclusion,” said an executive close to the discussions.
The situation has stressed relations between Nigeria and South Africa, but an MTN insider said the company was still considering listing on the Nigerian stock exchange — although not until the issue of the fine had been settled.
“The resolution of this situation will be a key test of the Nigerian legal and regulatory system. International investors will want to know that Nigeria provides a stable and fair regulatory environment. If Nigeria is proven otherwise, it will have longterm negative consequences for investment into the country as investors will avoid jurisdictions which they perceive as prone to irrational and unpredictable regulatory actions,” said a London-based analyst.
Credit agencies reacted negatively to the fine and cut MTN’s investment rating in recent weeks. Moody’s this week cut the company’s rating to Baa3, while Fitch and Standard & Poor’s placed MTN on the lowest investment grade.
It would be the largest fine ever levied in Nigeria for anything