It’s hard to believe the executive team at MTN can survive after the Nigerian regulator’s eye-watering R71bn ($5.2bn) fine. As the real story behind the shock emerges, recriminations are mounting. South Africa’s Public Investment Commissioner confirmed today that it is engaging with executives to find out exactly how the mess happened – and may well view this as an opportunity to flex some shareholder activist muscle. Dobek Pater, a respected telecoms analyst who specialises in Nigeria, suggests MTN’s managers were either naive or arrogant. The way he explains it, they saw a way to save $25m by not following the letter of the law. Should the axe fall, as seems certain, MTN’s directorate will have little trouble finding eager replacements. The 2014 annual report shows the company’s top dozen executives were paid R150m last year, led by CEO Sifiso Dabengwa’s R28m package. Indeed, shelling out to the brass is part of the company’s DNA – Mteto Nyati received a R14m “signing on” bonus; financial director Brett Goschen received a 31% pay rise to R13m last year; and new legal head Michael Fleischer was appointed at a R9m a year. Then again, in the private sector, high rewards also carry high risk. As MTN’s executive team is well aware. – Alec Hogg
By Gareth van Zyl
Johannesburg – Africa’s biggest mobile network MTN could have avoided a $5.2bn fine in Nigeria, but regulators in that country have also been harsh on the company.
This is according to Dobek Pater who is a director and analyst at telecoms, IT and media research firm Africa Analysis.
On October 26, mobile network MTN announced that it was fined $5.2bn by the Nigerian Communications Commission (NCC) for failing to disconnect up to five million unregistered SIM cards in that country.
The record fine came after Nigeria kick-started its SIM card registration process in 2013. This registration process in Nigeria was implemented to curb illegal activities with the use of unregistered SIM cards.
MTN is the biggest mobile network in Nigeria with an estimated 60 million subscribers.
“It’s up to the networks to register SIM cards,” Pater told Fin24 regarding the process in Nigeria.
“The registration wasn’t followed through,” commented Pater on the massive fine.
Furthermore, MTN has had to comply with the NCC in Nigeria to keep its licence, which is also up for renewal in 2016.
But Pater further pointed out that MTN could have also lost up to $25m if it disconnected the five million unregistered subscribers in Nigeria. This is because the average revenue per user of an MTN Nigeria subscriber is $5, said Pater.
“They (MTN) tried to sail too close to the wind,” added Pater.
But Pater said that regulators in Nigeria could be seeking to make an example of MTN, especially in light of former Nigerian finance minister Olu Falae having been allegedly kidnapped by a group of herdsmen that used unregistered MTN SIM cards.
“If you get on the wrong side of people with influence, you risk getting your marching orders in Nigeria,” Pater told Fin24.
Because MTN is the biggest of Nigeria’s four mobile networks, it’s also been under the spotlight of the NCC for not abusing its market dominance, said Pater.
The NCC has also previously fined MTN, Airtel, Glo and Etisalat in Nigeria for issues such as quality of network services in the country.
Pater, nevertheless, said he expected MTN to reach a negotiation with the NCC over the latest $5.2bn fine.
Meanwhile, MTN said on Monday afternoon that it was having discussions with the NCC over the fine.
This announcement came after the Johannesburg Stock Exchange (JSE) briefly suspended trade in MTN on Monday as unconfirmed reports emerged in Nigeria about the mobile network having reportedly decided to pay the multi-billion dollar fine.
MTN is also facing an investigation by the JSE into how the mobile network announced its Nigerian fine on SENS on Monday October 26.
MTN is Africa’s biggest mobile network with over 230 million subscribers in 22 countries across the Middle East and Africa.
Fin24
Source
http://www.fin24.com/Tech/Featured/MTN-sailed-too-close-to-the-wind-in-Nigeria-20151102
