MTN to pay $1.7 bn Nigeria telecoms fine

Johannesburg, South Africa | AFP |

South African telecoms giant MTN said Friday it would pay a $1.7 billion fine to the Nigerian government in a “full and final settlement” over its failure to disconnect unregistered mobile phone users.

The Johannesburg-based company said in a statement that “MTN Nigeria has agreed to pay a total cash amount of naira 330 billion over three years.”

Africa’s biggest mobile-phone operator was fined $3.9 billion last year and has since been in negotiations with the Nigerian government to reduce the size of the penalty.

The company was hit with the huge fine amid fears that some of the 5.1 million affected lines were being used by Boko Haram insurgents.

Nigerian Communications Commission (NCC), the west African country’s telecoms regulator, confirmed that following six months of talks, the MTN fine had been reduced.

It said in a statement that its decision to reduce the fine was based on “professionalism and global best interest.”

“We were careful not to take decisions that were likely to cripple the business interest of the operators we regulate,” said the commission’s executive vice chairman Umar Danbatta.

“Besides, the downturn of the global economy is biting hard on everybody and every sector, so we must therefore be sensitive and flexible in our decisions,” he said in the statement.

After MTN’s announcement, its shares on the Johannesburg Stock Exchange rose as much as 21 percent, on track for the biggest gain since 2008, according to Bloomberg News.

The country’s telecoms regulator had handed down the fine last year citing an inability to trace users in a country plagued by frequent kidnappings and Boko Haram militants.

The sum was originally set at $5.2 billion before being to lowered to $3.9 billion on appeal.

 ‘Relief to investors’

“MTN is pleased to inform shareholders that the matter has been resolved with the Federal Government of Nigeria,” the company statement said.

MTN executive chairman Phuthuma Nhleko “expresses his thanks and gratitude to (the Nigerian government) for the spirit in which the matter was resolved,” it added.

MTN paid one instalment in February and has scheduled six other payments to cover the fine by May 2019.

“The news is a huge relief to investors, given the fact that Nigeria ended up not imposing the initial amount of the fine,” Dobek Pater, telecoms specialist at the Africa Analysis consultancy, told AFP.

“MTN could not afford to lose a major market such as Nigeria and by paying the fine it shows that they still have faith in keeping their investment there.”

As part of the deal has undertaken to “tender an apology” to the government and people of Nigeria over the matter, according to the NCC.

It also promised to “take immediate steps steps to ensure the listing of its shares on the Nigerian Stock Exchange as soon as commercially and legally possible,” said the NCC.

The Boko Haram violence has left at least 17,000 dead and forced more than 2.6 million people from their homes since 2009.

The MTN fine dominated South Africa’s President Jacob Zuma visit to Nigeria earlier this year.

Commenting on the MTN penalty, President Muhammadu Buhari had in March said his government was more concerned about national security than the fine.

“You know how the unregistered GSM (Global System for Mobile communication) are being used by terrorists.

“Unfortunately MTN was very slow and contributed to the casualties,” said Buhari during Zuma’s visit to Nigeria.

Relations between the continent’s two economic powerhouses have been strained over recent years on issues including economic rivalry and political friction.

South Africa’s growth has been undermined by the slowdown in China and falling commodity prices, while Nigeria, the continent’s top oil producer, has suffered from low oil prices.