MTN shareholders should applaud the tenacity of re-installed CEO Phutuma Nhleko. A substantial shareholder in the business he transformed by betting on Nigeria when literally nobody outside Africa would, Nhleko was parachuted back into the hot seat after unfortunate Sifiso Dabengwa and MTN’s former Nigerian chief became victims of a massive Nigerian fine. Helped no doubt by his personal interest, Nhleko is leaving no stone unturned. And the longer the saga drags on, the more obvious it becomes that MTN is a victim of the developing country curse of politics trumping economics. Nigeria’s new President Muhammadu Buhari swept to power on an anti-corruption ticket, vowing to excise an endemic cancer that bedevils the resource rich nation. His greater challenge, though, is to try balance the books after the crashing crude price landed the oil-dependent economy with a record budget deficit. It’s hard not to see how the new President would have told minions to find a way of funding this year’s $5bn shortfall and next year’s anticipated $11bn State spending deficit. The outrageously disproportionate fine on MTN looks to have been a knee jerk response to an apparently easy target. But Nhleko is a fighter. Showing spirit that all-too-timid South African business leaders would do well to replicate. – Alec Hogg
By Felix Onuah and Camillus Eboh
ABUJA, Dec 23 (Reuters) – Nigerian authorities will wait for the outcome of a court challenge filed by South African telecoms firm MTN before deciding on whether to enforce a $3.9 billion fine, a spokesman for the telecommunications ministry said.
The ministry spokesman contradicted a source in the Nigerian Communications Commission (NCC), who earlier said “appropriate action” would be taken against MTN if it failed to pay the fine by a Dec. 31 deadline for failing to disconnect users with unregistered SIM cards.
Nigeria has been trying to halt the widespread use of unregistered SIM cards amid worries these are being used for criminal activity, including by the militant Islamist group Boko Haram.
The NCC slapped a $5.2 billion fine on MTN in October but after weeks of negotiations reduced it by 25 percent this month, setting a deadline for Dec. 31.
However, the operator was still not prepared to pay the reduced fine and said last week it would challenge the penalty in a Lagos court.
“The federal government, NCC (regulator) or any government agent will not do anything at the expiration of the Dec 31 deadline,” said Victor Oluwadamilare, the ministry’s media assistant.
Nigeria wants R59 billion from MTN by 31 December. That's almost equivalent to Zimbabwe annual budget of $4bn. Yoh
— Sure Kamhunga (@sure_kamhunga) December 22, 2015
“Now that they (MTN) have gone to court we will await the outcome of the case,” he added. “This is a government that believes in the rule of law.”
The ministry appears to have taken a softer stance than the regulator on the dispute. The minister Adebayo Shittu told Reuters last month the West African nation did not want MTN to “to die” from the fine.
Shares in MTN, down about 25 percent since the fine was announced in October, were little changed at 141 rand by 1028 GMT.
MTN spokesman Chris Maroleng declined to comment.
The move against MTN came months after Muhammadu Buhari became president of Africa’s biggest economy, promising tougher regulation and a fight against corruption.
MTN was wrong. They continued despite several warnings. I don't know why they expect to get off lightly. https://t.co/YStkifHT3U
— Dineo Tsamela (@DineoTsamela) December 22, 2015
Other telecoms firms operating in Nigeria disconnected unregistered users within the deadlines set by the authorities.
Some analysts have said the size of the fine imposed by MTN risked damaging Nigeria’s efforts to shake off its image as a risky frontier market, but others said it showed Abuja was keen to enforce the law.
