Home Infotech Why stakeholders back NCC on MTN’s $5.2bn fine

Why stakeholders back NCC on MTN’s $5.2bn fine


Communications Commission (NCC) may have told Nigerians that it extended without deadline,  the fine payment it slammed on MTN Nigeria as to enable the firm and its South African parent body conclude negotiation on how effective and hassle-free they can pay the $5.2 billion fine and still remain in business. This is understandable after all.
But the truth must be said that for the telecoms giant, and Africa’s largest telecommunications firm, the last three weeks will remain the most turbulent time in its history.
Established in 1994 in Johannesburg, South Africa, MTN has come under fire in Nigeria, a major arm of the telecommunications firm.
Apart from having its shares plummeted severely on the Johannesburg Stock Exchange (JSE), which as at last week, declined by about 25 per cent since the fine was made public weeks back, valuing the company at 289 billion rand ($20.4 billion), the issue last week also claimed its first casualty, …..a big one for that matter in the person of the Chief Executive Officer, Sifiso Dabengwa, who tendered his resignation letter on  two weeks ago for failing to mediate effectively with the Nigerian authority, according to sources .
Nigeria accounts for 37 per cent of revenues for MTN, which operates in more than 20 countries in Africa and the Middle East. According to analysts, with Nigeria been the major ‘cash cow’ for the Group, it is onus on the management to abide by the rules and regulations governing the activities in the country, especially one, which MTN is a signatory to.
After several warnings from the Nigerian Communications Commission (NCC) to telecommunications operators in the country including MTN Nigeria, Globacom, Airtel and Etisalat that they should disconnect defective Subscribers Identification Modules (SIM) cards, while others complied, NCC claimed that it still found about 5.1 million subscribers on the MTN network having pre-registered SIMs cards and incomplete registration details.
This led to the NCC slamming a N1.04 trillion ($5.2 billion) fine on the telecommunications firm for the defective SIMs at the cost of N200, 000 per each. The fine deadline actually expired on Monday, November 16 and certain quarters have it that the telecommunications firm risk further fine.
Indeed, and as expected this landmark decision has, expectedly generated all manner of reactions, from the legitimate to the ludicrous. Even the NCC has been accused of being too harsh and being anti-business. It has also been accused of frustrating Nigeria’s drive for more Foreign Direct Investments and of putting the jobs of thousands of Nigerians employed by the country’s leading telecommunications firm.
It has also been rumoured that the fine is an attempt to raise money for cash trapped government of President Muhammadu Buhari.
Already, divergent views have continued to trail sanction as it expired Monday.
According to a telecommunications expert, Kehinde Aluko, why then is the NCC being chided for taking the initiative to curb unacceptable corporate behaviour whereas MTN is getting sympathy for failing to abide by the rule books?
Aluko said ordinarily, to an average Nigerian they will likely tell you they wish MTN could also be fined for poor service delivery.
Aluko said some people have actually claimed the fine to be unfair because it makes up 1/4 of MTN’s total asset and may as a result push them out of business.
But my question is: “Should the fairness of the fine meted out be based on MTN’s profit margins and its ability to pay or the magnitude of the problem being addressed – which in this case is: ending terrorism and other criminal acts?. I believe the latter should be the litmus test for fairness. “
According to him, if you are familiar with corporate behaviour in Africa as compared to the rest of the world, you will know that corporations have constantly exploited weak regulatory bodies to get away with a lot that they wouldn’t dare attempt in the Global West.
It is due to this disparity, according to Aluko that a global treaty is now being crafted to regulate businesses and multi-national corporations, so that a minimum standard is maintained whether you are operating in any part of the world.
Still on this matter, former President, Institute of Software Practitioners of Nigeria (ISPON), Chris Uwaje, if that is the Law of the land, then compliance is demanded.
“Alternatively, they can go to court to test the interpretation of the law. There is always the risk potential in any business: a good example is the fine of over $8 billion to British Petroleum on the Oil Spill Saga and recently on Volkswagen of Germany for the technological (software) manipulation of the technical performance of VW Cars in the US market.
Another telecommunications expert, Calixthus Okoruwa, said the effects of the sanction will be with Nigeria for a long time if something concrete was not done about it.
According to him, with due respect to NCC, this is making mockery of regulation in Nigeria.
Okoruwa, in an interview with The Cable, said investors are not likely to forget that this is one country where a regulator can summarily impose a fine to the tune of billions of dollars on a telecom operation.
“The entire industry should be worried because this will considerably jeopardize investor confidence for a long time to come.
“It is believed in NCC and state security circles that MTN’s database contained phone numbers of kidnappers, insurgents, miscreants, armed robbers and other criminals. Would you say MTN did enough to rid its database of security threats? A telecom company is not a security company. The role of determining security threats is that of government and its security organs”, he stressed.
Besides, on possible industry gang up against MTN, top telecoms expert and former president of NCS, Mr. Chris Uwaje, MTN is not a monopoly in the communication domain, saying that they saw the market-benefits first before others came in and wrestled the challenges to a standstill.
The former ISPON president posited that its always good to envy good things,  “however, there are lots of misunderstanding in the Nigerian Telecommunication Ecosystem – from regulation, to spectrum allocation, to auctioning, to ownership structures, usage. The heart of the Telecommunications industry is software – not base station. Patronage of local software should be mandatory in this sector, to ensure that Nigerian developers have a challenging platform to oil their creativity and innovative skills in the Software and knowledge economy space.”
On the lessons for MTN to learn in this whole fracas, Uwaje stressed that Nigeria is still in a technology development slumber and its time to wake-up and re-engage the future.
According to him, all indications still point out that our national development agenda is scientifically and technologically defective – and suffocates the potential  of the gifted masses and by extension, under-developing the nation in many critical areas.
It is however, very important to bring down home, how NCC arrived at the fine.
The fact remains that the fine actually didn’t come from the blues. The NCC did explore the Nigerian Communications Commission (Registration of Telephone Subscribers) Regulation, 2011 to strike, which MTN also must have seen and owned a copy.
On November 7, 2011, the 12-page regulation was published in the Federal Government of Nigeria Official Gazette No 101 Vol.
Indeed this four-year old regulation, which was actually signed by the former Executive Vice Chairman of NCC, Dr. Eugene Juwah, provided the framework for the registration of subscribers of mobile phone users in Nigeria.
According to the information on NCC’s website, one of the objectives of SIM registration is to “assist security agencies in resolving crimes and by extension to enhance the security of the state”. So it is not in doubt that there exists a valid basis for regulation on account of possible conflict between the private profit motive and overall national security.
Pages 11 and 12 of the NCC Registration of Telephone Subscribers Regulations, the regulation sets out penalties for default in sections 19 and 20.
Section 12 (1, 2, 3) informed that upon the commencement of these regulations, licensees shall only provide new subscribers with subscription mediums enabled for limited access to their network services and such limited access shall last for the duration of the activation window.
Also, that it shall be the responsibility of a new subscriber to, at any time within the activation window, present information to the licensee from whom the subscription medium is obtained for registration in accordance with the requirements of these regulations.
Beside, upon the capturing and registration of the biometrics and the personal information of a new subscriber, the licensee shall activate the subscription medium on its network service and transit the subscriber’s information to the Central Database.
To justify the sanction, Section 20 (1) of the Regulation states that: “any licensee who activates or fails to deactivate a subscription medium in violation of any provision of these Regulations is liable to a penalty of N200, 000 for each unregistered but activated subscription medium.”
Section 20 (2) states further: “where the commission is satisfied that a body corporate is culpable, the Director, Chief Executive Officer, Manager or Secretary shall also be liable to pay fine of N200, 000 unless, having regard to the nature of his functions in that capacity and to all the surrounding circumstances, he proves that, (1) the offence was committed without his knowledge, consent or connivance; and (11) he took all reasonable precautions and exercised due diligence to prevent the commission of the breach.
Given how regulations are made in regulated sectors, it is inconceivable that MTN Nigeria was not aware of the regulation, the penalty for default, and the implication of default for its business.
Frankly speaking, operators in regulated environments have enormous legal and other resources to shape the outcome of regulations and analyse the risk to their operations.
The NCC has stated that MTN was fined so high because unregistered SIM cards pose a threat to national security particularly in light of the Boko Haram insurgency and other criminal activities that can be perpetrated with SIM cards.
While reports have it that MTN is seeking up to 60 and 80 per cent cut in the finel, pressure have  continued  to mount on why MTN must pay the total fine.
Advocacy for Societal Rights Advancement and Development Initiative (ASRADI) urged NCC not to be deterred, discouraged or intimidated by any means, stressing that since MTN willfully injured and violated 170 million or so Nigerians by defiantly keeping 5.1 million unregistered/improperly registered SIMs that could potentially be deployed to devastating use by kidnappers, armed robbers, insurgents and terrorists on its network, it (MTN) must face the music squarely.
ASRADI stressed that irresponsible, unscroupulous investors who will flout Nigerian laws or obey them in breach ought to be served notice that it is no longer business as usual.
Whereas stakeholders continues to call early resolution of the impasse, there are fresh indications that the Executive Chairman, Phutuma Nhleko, who took over from Dabengwa and is still here in Nigeria, hopes to resolve the lingering crisis around the $5.2 billion fine just few days after the November 16, expiration.

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