Pay Your $ 5.2bn Fine, FG Tells MTN

The federal government has urged MTN Group and its Nigerian subsidiary, MTN Nigeria, to pay the N1.04 trillion ($5.2 billion) fine imposed on it by the Nigerian Communications Commission (NCC) for failing to deactivate 5.2 million improperly registered subscriber identification module (SIM) cards.

Discussions between MTN Group’s management led by Mr. Sifiso Dabengwa, its group CEO/president and Nigerian vice president, Prof Yemi Osibanjo, revealed that plans by Africa’s leading mobile operator to secure a waiver on the fine failed. Instead, the federal government may be amenable for a staggering of the payment of the fine by MTN Nigeria.

MTN Nigeria angered the Nigerian telecommunications regulator by insisting on a deactivation of 5.2 million improperly registered SIM cards on its network. A presidency source confirmed yesterday that this was part of the agreement reached at the series of meeting held on Thursday and Friday in Nigeria.

The source said, “There have been series of meeting at the Presidency between Vice President Osinbajo and MTN team, both from South Africa and the Nigerian arm. The telecommunications firm wanted a waiver considering their level of investments in the country, but government did not buy the idea of waiver. Instead, I think there will be concession, but certainly not a waiver.

“At the conclusion of the meeting, the MTN people negotiated on how to stagger the payment. The Presidency is even angry because MTN was a signatory to the regulation, but it failed to comply with rules.”

An NCC document revealed that MTN Nigeria had committed 28 separate infractions, forcing it to wield the big stick to beat MTN into line.

Meanwhile, some top officials of MTN are under investigation by the Johannesburg Stock Exchange (JSE), South Africa, for insider trading following the high volume of shares traded last Monday on MTN’s stock some hours before the announcement by MTN of its $5.2 billion fine in Nigeria.

The JSE regulator wants to find out if any insider trading took place that may have led to some profit takers disposing their shares before the fine announcement.

Andre Visser, general manager, Issuer Regulation at the JSE, said the JSE “is in conversation with the sponsors in the interest of MTN shareholders.”

Also on Friday, MTN issued an update to shareholders and cautionary announcement saying its “Group CEO is engaging with the Nigerian authorities on the regulatory aspects of this matter. In addition senior management of the company and its advisors are currently engaging with the JSE Ltd on the timing of the aforementioned SENS announcement.”

“The company will update shareholders through SENS on these engagements as soon as possible. Shareholders are therefore advised to exercise caution when dealing in the company’s securities until a further announcement is made.”
MTN’s share price tanked about 20 per cent early last week, reducing its market capitalisation by R68bn. On Friday, its share rallied back by about 1.12 per cent.

Meanwhile, credit rating agencies Fitch and Moody’s have lowered MTN’s credit rating outlook to “negative” from “stable,” citing the regulatory fine.

Standard & Poor’s has also lowered the group to “BBB-” from “BBB” and placed it on credit watch with negative implications.

Nigeria is MTN’s largest market with 62.5 million subscribers.