If you were wondering how the spat between the NCC and Nigeria’s biggest telecom company by subscribers was resolved, now we know. MTN failed to disconnect 5.1 million lines between August and September and the fine per line was put at 200,000 Naira and this meant that MTN defaulted and had to pay over 1 trillion Naira and if you us today’s official rates of 280 Naira to the dollar, that meant $3.6b in fines to the regulatory body, Nigerian Communications Commission (NCC). Well since then they have renegotiated the fine with the help of former US Attorney General, Mr. Eric Holder to about 300b Naira/$1.07b. But how does a negotiation involving 1 trillion Naira end up being 300b Naira? The answer is what was reported in The Independent yesterday in South Africa which is the home country of MTN. “MTN Nigeria is preparing for a listing on the Nigerian Stock Exchange (NSE) as soon as this is commercially and legally possible…” and as part of the agreement, the telecom giant will now pay over three years with a commitment to abide by the rules in future in Nigeria. A separate CNBC report says MTN which gets a third of its revenue from Nigeria aims for the listing to take place during 2017, subject to market conditions….MTN Nigeria appointed Stanbic IBTC Capital, Standard Bank of South Africa and Standard Advisory London, and Citigroup Global Markets, as joint transaction advisors and global coordinators, with Stanbic acting as lead issuer.
The deal wasn’t a smooth one because some in the current administration think the negotiations could have gone better and this resulted in a reported disagreement between the office of Attorney General Abubakar Malami and the NCC which issued the fine in the first place on behalf of the government. They felt the Federal Ministry of Justice hijacked the process and didn’t carry them along. Unconfirmed sources even said the Ministry of Communications which is the umbrella body which the NCC falls under and the Ministry of Justice at a time initiated talks with MTN without the knowledge of the NCC. But if you’re familiar with the way the NCC has been operates, it enjoys a level if independence with reports that the current Executive Vice Chairman/CEO Prof. Umaru Danbatta reporting sometimes directly to the President on some occasions. Like the position of Central Bank of Nigeria Governor and other key parastatals in Nigeria, the office of the head of the NCC is tenured and powerful because of the revenue that’s generated by the government from the sector it regulates. So you can understand why Presidents may allow the head of such organisations to sometimes report to them directly.
NCC data shows that MTN now has about 57 million subscribers in Nigeria. In total though the company has about 300 million subscribers in the EMEA (Europe, Middle East and Africa) area with Nigeria accounting for about a third of its revenue which makes all the sense if listing on the Nigerian Stock Exchange was included in final negotiations. From all its operations the company recorded a revenue of $15.4b in 2015, an operating income of $5.22b, net income of $3.3b, Total assets of $13.7b and Total equity of $12.4b in the same year.
For those who weren’t following the case, here’s a short timeline of events;
Timeline of the MTN Nigeria fine
October last year, Nigeria slams a $5.6b fine on MTN Nigeria for not disconnecting lines after a SIM card registration deadline passed.
November 2015 MTN Group CEO Mr. Sifiso Dabengwa resigns, and the company appointed Phuthuma Nhleko as executive chairman in a temporary capacity.
January 2016, an out of court settlement was postponed as the matter continued to gain attention.
March 2016, MTN proposes about 300b Naira in payment.
July 2016, deal is reached to list on the Nigerian Stock Exchange in addition to the 300n Naira.
Future: maybe everyone will live happily ever after.
Image Credit: Herald.ng