MTN vows to fight Benin’s regulator over suspension
The company locked horns with the Benin telecommunications regulator on Thursday after its network was suspended and was handed a 600% increase in licence fees.
But Africa’s biggest cellphone company signalled on Friday that it was not planning to bail out just yet in spite of the “current regulatory uncertainty” in a country with a population of eight million.
It indicated that it was planning to enter into talks with the country’s regulator. “MTN is committed to continued engagement with the relevant authorities in Benin to find an amicable resolution to the current regulatory uncertainty,” the group said in a statement.
The suspension of its Benin operations didn’t damage MTN’s shares, which closed down 0.14% at R101.89 on Friday.
Benin silenced MTN and Atlantique Telecom late on Thursday, cutting off nearly 1000 000 subscribers, after the two companies failed to sign new contracts, including a 50-million operator fee. The regulator said new contracts were needed because both networks had changed their names without its permission.
The increase would be retroactive, meaning each company would pay an extra 52.6-million to the state to continue operating.
MTN acquired the network in Benin with its 5.5-billion takeover of Investcom. The network traded previously as Areeba Benin and has about 514 000 users, or a 40% market share.
MTN figures for the year to December show Benin contributed R289-million revenue and R150-million earnings before interest, tax, depreciation and amortisation. Its Benin subscribers spend an average of 21 a month, one of the highest user spending figures for its operations in 21 countries.
As only 19% of Benin citizens have cellphones, there is good growth potential.
Trouble began when MTN tried to rebrand Areeba’s operations last month, but the regulator claimed Areeba did not complete the formalities needed to transfer its licence to MTN.
The regulator told Areeba to submit necessary files, or have its services axed. The same demand was made of Atlantique Telecom, which is rebranding its network as Moov. Areeba directors said they had already asked for the necessary authorisation.
Four mobile operators compete in Benin. The authority evidently plans to impose the same one-off licence fee rise on all of them.
Analysts did not see other national regulators following Benin’s lead. “I don’t see it having a domino impact. It could upset the apple cart, but I don’t think Ghana or Nigeria will follow suit,” said Richard Hurst of BMI-Tech.
He said the Benin regulator’s actions sent mixed messages to investors. “It seems the regulator is holding these networks to ransom. They could have found different mechanisms to unlock funds from the mobile operators. I get the impression there was a breakdown of communication down the line.”
Hurst said MTN would have to decide whether subscriber growth prospects validate a higher licence fee. “The question is, will it take the heat and pay the increase or will it be worth pursuing legal relief by taking the regulator to court?
“They are applying a new law retroactively, and in most instances you just can’t do that, so there may be a legal loophole.”
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