Sector ... Telecom
Company ... MTN

MTN licence extended in Nigeria

Burgess COMMENTARY

Peter Burgess

MTN licence extended in Nigeria

Customers register their MTN Group Ltd. mobile phone sim cards at a roadside kiosk in Lagos, Nigeria, on Saturday, Oct. 31, 2015. MTN, Africa's largest wireless operator, remains in negotiations with Nigerian regulators over a $5.2 billion fine for failing to comply with an order to disconnect customers with unregistered phone cards, according to a person familiar with the matter. Photographer: George Osodi/Bloomberg©Bloomberg

MTN finally had some good news to report on Tuesday with the announcement that Nigeria has agreed to renew its operating licence in the country, even as a $5.2bn fine imposed by the country’s regulators hangs over the telecoms group.

The South Africa-based company said its licence to operate in its biggest market by revenues and customer numbers had been extended by five years to 2021 at a cost of $94m.

The news comes as MTN continues to negotiate with Nigerian authorities over the massive fine imposed on the group relating to the company’s process for disconnecting unregistered Sim cards. The fine has put the group’s management under intense pressure, with shareholders and investors complaining of a lack of transparency. More than R70bn ($5bn) has been wiped off MTN’s market value since the company confirmed the fine last month.

Dan Matjila, chief executive of the Public Investment Corporation, South Africa’s state-owned pension fund manager and MTN’s largest shareholder, said the company should have “handled it better right from the outset”.

“I would have thought they would have been told a long time ago that they need to comply. I don’t expect this to be a surprise,” he said. “I’m worried because there’s a lot at stake for shareholders to lose in terms of value.”

PIC has a stake of about 16 per cent in MTN, and Mr Matjila said the group needed to check up on compliance “wherever they operate”.

The telecoms company has previously courted controversy with its operations in Iran, where Turkcell, its Turkish rival, launched legal action accusing it of corruptly securing a mobile licence in the Islamic Republic. MTN has denied the allegations.

The company has operations across 22 nations in Africa and the Middle East, including war-torn Syria, with more than 233m subscribers. It has more than 60m subscribers in Nigeria, Africa’s most populous country. MTN had sales of about $4bn in Nigeria last year, equivalent to just over a third of the group’s total revenue. The Nigerian licence, which was first issued in 2001, was due to expire in February next year. Nigerian authorities have long highlighted the disconnection of unregistered Sim cards as a security-related matter as the country battles an insurgency by Boko Haram Islamists in the north and kidnappings for ransom in other parts of the country.

The $5.2bn fine was calculated on the basis of a 200,000 naira penalty for every unregistered Sim card not disconnected by a deadline set by the regulators. This is in line with a government gazette published in 2011.

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