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South Africa’s MTN aims to settle Nigerian fine out of court, shares jump

22 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – A judge has given South African telecoms company MTN Group until March to try to reach a settlement with the Nigerian authorities over a disputed $3.9 billion fine, sending its shares 8 percent higher.

The Nigerian Communications Commission (NCC) imposed the penalty on MTN last year for failing to disconnect users with unregistered SIM cards.

Nigeria has been trying to halt the widespread use of such SIM cards amid worries these are being used for criminal activity, including by the militant Islamist group Boko Haram.

MTN has been lobbying against the fine and has already seen it cut from an initial figure of $5.2 billion.

The judge at the Federal High Court in the Nigerian city of Lagos on Friday adjourned the case until March 18 to allow the parties to try to reach an agreement, MTN said in a statement.

The prospect of a lower fine boosted MTN shares.

Dobek Pater, the managing director of research group Africa Analysis, estimated that a fine that could satisfy both parties would between $1 and 2 billion.

MTN, which is led by Executive Chairman Phuthuma Nhleko makes about 37 percent of its revenue from Nigeria, and the current fine equates to more than twice its annual average capital spending over the past five years.

Nhleko was put in charge for up to six months in November to help to steer the company through the crisis.

The group is also fighting allegations for not paying tax in Cameroon..

 

(Reporting by Thekiso Anthony Lefifi; Editing by Keith Weir)

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Nigeria orders MTN to pay $3.9 bil fine by Dec 31

23 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – South African mobile phone operator MTN will have to pay a $3.9 billion fine imposed by Nigeria for failing to disconnect users with unregistered SIM cards by Dec. 31, a source in the Nigerian telecommunications regulator said on Wednesday.

Nigeria’s telecoms regulator had cut the fine from an initial $5.2 billion after weeks of lobbying by Africa’s biggest mobile phone company to get it reduced.

“Appropriate action will be taken,” should MTN fail to meet the deadline, the source said, asking not to be named and giving no further details.

MTN said this month it would challenge the decision in court.

Nigeria has been pushing telecoms firms to verify the identity of subscribers amid worries unregistered SIM cards were being used for criminal activity in a country facing the insurgency of militant Islamist group Boko Haram.

The fine came months after Muhammadu Buhari swept to power in Africa’s biggest economy following a campaign in which he promised tougher regulation and a fight against corruption.

 

(Reporting by Felix Onuah; Writing by Ulf Laessing, editing by William Hardy/Keith Weir)

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Nigeria cuts MTN fine by more than a third to $3.4 bil

3 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Nigeria has cut a fine imposed on MTN Group by more than a third to $3.4 billion and given the South African mobile phone operator until the end of the year to pay it, the company said on Thursday.

The Nigerian Communications Commission handed Africa’s biggest mobile phone company the penalty in October after MTN failed to cut off users with unregistered SIM cards from its network.

Nigeria, MTN’s biggest market, has been pushing telecoms firms to verify the identity of subscribers amid worries unregistered SIM cards were being used for criminal activity in a country facing the insurgency of Islamic militant group Boko Haram.

The fine, originally $5.2 billion, prompted MTN to hold talks with the NCC over the past five weeks seeking a reduction.

“After further engagements with the Nigerian authorities, the NCC has reduced the imposed fine,” MTN said in statement.

The company, which makes about 37 percent of its sales from Nigeria, said it was considering the NCC’s decision.

“Executive Chairman Phuthuma Nhleko will immediately and urgently re-engage with the Nigerian authorities before responding formally,” it said.

Nhleko, who took charge for up to six months after the abrupt resignation last month of Sifiso Dabengwa, led the company for nine years before stepping down in 2011.

The fine came months after Muhammadu Buhari swept to power in Africa’s biggest oil producer, after a campaign in which he promised tougher regulation and a fight against corruption.

It also came after the kidnapping on Sept. 21 of Olu Falae, former Nigerian finance minister, by people whom the regulator said had used MTN phone lines to negotiate a ransom.

Some analysts have said the size of the fine risked damaging Nigeria’s efforts to shake off its image as a risky frontier market for international investors. Others said the fine showed Africa’s biggest economy was keen to enforce the law.

Separately, MTN announced a shake-up of its senior management structure in an effort to strengthen oversight, governance and regulatory compliance across its operations in 22 countries in Africa and the Middle East.

MTN’s Nigeria head Michael Ikpoki and the head of regulatory and corporate affairs Akinwale Goodluck have resigned with immediate effect, MTN said.

The company named Jyoti Desai, a 14-year veteran of the Johannesburg-based firm, as chief operating officer with effect from Dec. 1. Desai’s replacement as Group Chief Technology and Information Officer will be announced soon, MTN said.

 

(By Tiisetso Motsoeneng. Editing by Miral Fahmy and Mark Potter)

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New MTN boss hints at cut to $5.2 bil Nigeria fine

10 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – The newly installed head of South Africa’s MTN has hinted that he would seek to reduce a $5.2 billion fine imposed on African’s biggest mobile telecoms company by the Nigerian authorities.

Non-executive chairman Phuthuma Nhleko was named executive chairman of MTN for up to six months after Sifiso Dabengwa stepped down as CEO with immediate effect on Monday.

His priority is dealing with the crisis in Nigeria, Africa’s most populous nation, which is MTN’s largest market and contributes more than a third of its revenues.

“I can’t say whether we’ll pay the whole fine. I don’t want to negotiate with Nigerian regulators on a public forum,” Nhleko, who is also a former CEO of MTN, told Talk Radio 702.

MTN has a deadline of Nov. 16 to pay the fine imposed on its unit in Nigeria for failing to cut off more than 5 million users with unregistered SIM cards.

The Nigerian communications regulator has been pushing cell phone network companies to verify the identity of their subscribers because of fears that unregistered SIMs were being used for criminal activity.

MTN would not comment on whether it has approached banks to ensure enough cash is available should the fine be enforced.

“The planning is based on all possible outcomes and contingencies and our aim is to comply with all regulations in Nigeria,” said MTN spokesman Chris Maroleng.

But analysts say Nhleko is pulling out all the stops to get the fine reduced.

“Nhleko will bring the matter to a conclusion,” said 36One Asset Management analyst Jean-Pierre Verster.

“I expect there will be a discount of somewhere between 5 percent and 75 percent.”

He sees the Nigerian regulator’s renewal of MTN’s operating licence last week as a sign that the regulator could cut MTN some slack.

Political risk consultancy eurasia said MTN would probably secure a reduction to the fine.

“We expect an eventual compromise to sharply scale back the size of the penalty (to less than half the original amount), especially as MTN takes concrete steps to address the regulator’s concerns,” it said in a published note.

Shares in MTN were down 3.9 percent at 153.75 rand by 1252 GMT, compared to a 1.6 percent drop in the Johannesburg Stock Exchange’s benchmark Top-40 index.

 

(Reporting by TJ Strydom; Editing by James Macharia and Keith Weir)

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Nigeria gives MTN two weeks to pay $5.2 billion fine

31 October 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS/JOHANNESBURG (Reuters) – Nigeria’s telecoms regulator on Friday gave MTN Group two weeks to pay a $5.2 billion fine imposed on Africa’s biggest mobile phone company for failure to cut off millions of users with unregistered SIM cards.

The Nigerian Communications Commission (NCC) imposed the penalty on Monday on MTN’s Nigeria unit, the group’s biggest market by subscribers, sending the phone operator’s stock tumbling by about 20 percent this week, though they bounced 2 percent by midday Friday.

The fine comes months after Muhammadu Buhari swept to the helm of Africa’s biggest oil producer after a campaign in which he promised tougher regulation and a fight against corruption.

The telecoms regulator said MTN failed to disconnect subscribers with unregistered or incomplete SIM cards, after ordering all network operators to do so. NCC said only MTN had failed to comply with the directive.

An NCC source has said the regulator’s decision was based on advice from Nigeria’s state security service, which suspected unregistered SIM cards were being used for criminal activity in a country facing Islamic militant group Boko Haram’s insurgency.

NCC spokesman Tony Ojobo said MTN had until Nov. 16 pay up, but the two sides were in talks to resolve the matter.

“The outcome of the discussion may affect the date. That’s why they are having the discussion so that they can reach a solution,” Ojobo said.

MTN declined comment.

 

INTERNAL SECURITY

Nigeria’s presidency and internal security agency were also involved in the talks, a regulatory source said. MTN Chief Executive Sifiso Dabengwa flew to Abuja to make what three sources familiar with the matter said was an attempt have the penalty reduced.

If it stands, the fine, almost a quarter of Nigeria’s 2015 budget of $22 billion, would wipe out more than two years of MTN’s annual profits.

It was unclear what would happen to MTN, whose Nigerian license is up for renewal in 2016, if the company fails to pay the fine, but NCC’s powers include revoking licenses.

Some analysts said the size of the fine risked damaging Nigeria’s efforts to shake off its image as a risky frontier market for international investors.

“Why this over-reaching regulation? It simply adds to perceptions about Nigeria as unfriendly place for foreign capital,” Vestact fund manager Sasha Naryshkine said in Johannesburg.

But Frost & Sullivan analyst Joanita Roos said the move helped, rather than damaged, Nigeria’s image. “The harsh action taken by regulators … does in fact protect and contribute positively to the reputation of the country.”

MTN also faces a Johannesburg bourse investigation on the timing of the announcement that it was facing the penalty. MTN’s confirmation came after news reports of the fine. South African companies are required to immediately disclose any price-sensitive information.

(By Chijioke Ohuocha and Tiisetso Motsoeneng. Additional reporting by TJ Strydom in Johannesburg; Editing by James Macharia and David Holmes.  Reuters)

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