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News Analysis… NCC vs MTN: When two elephants fight…



Telecoms operators cry out over multiple environmental taxes

In from Ali Smart . . .
Time was when MTN Nigeria was the poster boy used by the nation’s telecoms industry regulator, the Nigerian Communications Commission (NCC) to push the ideas and ideals of what operators in the telecoms industry should be.
Of course, MTN Nigeria, like the beautiful bride could do no wrong as far as the NCC was concerned.
But it does appears the honeymoon is over between both parties as the same NCC which hitherto pampered MTN, ironically, decided to use MTN as a scapegoat this time around to prove that the regulator is not a toothless bulldog after all.
No doubt, the fine brought with it social, economic and political implications.
Crux of the matter
Very recently, MTN, easily Nigeria’s foremost mobile communications company had serious issues with its SIM registration database. It is not clear what exactly happened but many subscribers were unable to use their lines apparently for not being registered.
Service centres of the company were daily besieged by thousands of subscribers who had been locked out of the network and are not able to make calls.
A chapter of accident begins
As MTN was still battling to resolve the SIM registration issues with its customers, the NCC’s sledge hammer fell as it was fined $5.2billion and given until November 16 to pay up, which relates to the timing of the disconnection of 5.1 million subscribers and is based on a charge of N200,000 ($1,005) for each unregistered customer.
Ripple effects of NCC fine
With Nigeria as MTN’s biggest market with 62 million clients as of September, many observers have said the fine by NCC can spell doom for the company in the short, medium and long term.
Anthony Osae-Brown, an economic analyst, in a chat with Ripples Nigeria said the fine if implemented to the letter could mean the end of MTN Nigeria.
“Inasmuch as l feel the NCC as the regulator has the right to wield the big stick to whip operators into line, l think the imposition of $5.2billion fine is killing. If you consider the fact that this fine is the gross total of its annual earnings.”
Expatiating, he said: “From what I know, there would be many casualties involved. Apart from MTN that would suffer in terms of revenue loss, the rest of us would equally bear the brunt.
“MTN revenue is the total budget of Lagos state for instance. So just imagine that a company like MTN folds up, the impact on businesses is huge; Job loss, social dislocation and all of that. With a subscriber base of over 62million, where do you want them to go?”
For Simon Oche, the fine is just okay. Apparently buoyed by patriotic fervour, Oche, a journalist said MTN overreached itself.
“Let’s look at the issues dispassionately rather than pander to sentiments. The question to ask is did MTN not flout the extant laws of Nigeria knowing full well the repercussions? So why argue after the facts?”
“MTN has to learn to abide by simple rules. Nigeria is not a banana republic,” Oche said in a tone of finality.
Already the company’s shares have slumped 14 per cent at the Johannesburg Stock Exchange since October 26, when the fine was imposed.
A staff of MTN who confided in Ripples Nigeria, said an air of uncertainty now pervades the company as the staff bemoan their fate in the likely effect that the company shuts down.
Possible diplomatic row
In the view of commentators, the current impasse between the MTN and NCC may adversely affect the diplomatic relations between the two countries. In the past, a series of diplomatic spats have soured relations between Africa’s two biggest economies.

Read also: N1.4tn fine: NCC gives MTN Nov deadline

The most recent occurred in April, when Nigeria’s government allegedly ordered its two most senior diplomats in South Africa to return home for consultations following a wave of attacks against immigrants, including Nigerians, in Johannesburg and Durban.
“South Africa does not have a track record of defending its national company champions internationally,” Nic Borain, a political analyst, who advises BNP Paribas Cadiz Securities, said.
Thankfully, the home country is seeking a diplomatic solution to resolve the crisis.
South Africa’s Deputy President Cyril Ramaphosa has urged Africa’s biggest mobile-phone company, the MTN Group Ltd., to follow the rules in countries where it is operating.
Ramaphosa, in an address to lawmakers in Cape Town last Wednesday, said the government would be taking note of what “is happening with a view of seeing how the company involved responds and reacts” to its challenges.
“We would like our companies to comply with the laws and regulations of countries where they operate, without violating them.
“It does seem like in the case of Nigeria, there were issues, and those issues need to be addressed.
“If this fine is indeed imposed as it is, it is going to impact on South Africa as well, as our revenue fortunes from a taxation point of view are going to be lower,” he said.
Agency reports indicated that comments by Ramaphosa, a former chairman of MTN, suggested that South African authorities might leave MTN to face its problem as it seeks to have the penalty reduced.
“On the face of it, this fine seems seriously over the top. Ramaphosa’s words about the issue seem weak as they are too much on the side of caution,” Borain stressed.
Lawmakers plan to summon MTN officials to explain why the company was fined, Nkhensani Kubayi, chairwoman of that country’s Parliament’s telecommunications committee has stated.
The panel will also ask the South African industry regulator to determine whether MTN is compliant with local rules, with hearings likely to take place next year, she said.
The company from all appearances has accepted its fate, and is willing to pay the fine, but wants it staggered. But whether the NCC gives the MTN this allowance is a question begging for answers as November 16 draws near.

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