The Nigerian Communications Commission (NCC) recently imposed a fine of 1.04 trillion naira (around R73 billion) on MTN Nigeria, sending the company’s share price plunging.
The fine was imposed because MTN Nigeria did not disconnect 5.1 million subscribers as required by the country’s SIM registration rules.
Two of the questions regarding the fine in Nigeria are: Did MTN break the NCC’s rules, and why did it take so long to inform shareholders about the fine?
Delay in informing shareholders about the fine through SENS
News about the fine was broken by the Technology Times in Nigeria early on 26 October. MTN only made an official announcement regarding the issue much later that day.
With high trade volumes in the morning before the MTN SENS announcement, the Johannesburg Stock Exchange (JSE) subsequently decided to investigate insider trading.
This does not bode well for the company, but according to MTN spokesperson Chris Maroleng the delay in the announcement was unavoidable.
Maroleng told MyBroadband the fine took them by surprise, and that the media report in the Technology Times was based on leaked information.
He said they had to wait for a formal notification and verification of the fine before making an official announcement – a process which took time.
Maroleng said the argument that investors who acted on media reports – rather than waiting for MTN’s SENS announcement – had an advantage, is valid.
To prevent a repeat of the situation, Maroleng said they are improving their systems to speed up the process of providing information to stakeholders.
Did MTN break the rules?
The big question regarding the fine in Nigeria is: Did MTN break the NCC SIM disconnection rules?
MyBroadband asked Maroleng this, but he said he is uncertain about the details of the regulations related to this issue.
The NCC has issued a seven-day ultimatum to Global System for Mobile Communication (GSM) and other network providers to deactivate all pre-registered Subscriber Identification Module (SIM) cards or face sanctions.
The telecoms regulatory body gave the ultimatum after a high-level security meeting between the office of the National Security Adviser (NSA), Department of State Service (DSS), the network operators, and the NCC in Abuja.
According to the publication, representatives of MTN were at the meeting where the ultimatum was issued.
MTN said the fine “relates to the timing of the disconnection of 5.1 million MTN Nigeria subscribers who were disconnected in August and September 2015”.
Maroleng said MTN deregistered 5.1 million subscribers in Nigeria who were deemed to be unlawfully registered during the two months.
He said MTN was engaging with the NCC during this period, which is why they were surprised by the fine.
“We thought we were doing what was needed to comply with the regulations… we engaged with the NCC regarding the issue,” said Maroleng.
However, with a deadline of 12 August 2015 to deactivate pre-registered SIMs, and a warning of sanctions if this was not done, it is not surprising the NCC took action against MTN.
Licence renewed in Nigeria
It is not all doom and gloom for MTN in Nigeria. The NCC has approved the renewal of MTN’s digital mobile licence, which has been extended to 2021.
Maroleng said the licence renewal is a separate matter to the fine, and that issues surrounding the fine will not influence their licence in the country.
He said they remain in negotiations regarding the fine, and that MTN is looking for a speedy resolution.