NCC’s N1.4trn Fine on MTN

The Nigeria Communications Commission [NCC] sent shock waves through this country’s corporate and business world last week when it slapped a fine of N1.4 trillion, equivalent to $5.4 billion, on telecom giant MTN Nigeria. The fine was slapped on this country’s largest provider of mobile phone service for failing to disconnect 5.1 million subscribers with […]

The Nigeria Communications Commission [NCC] sent shock waves through this country’s corporate and business world last week when it slapped a fine of N1.4 trillion, equivalent to $5.4 billion, on telecom giant MTN Nigeria. The fine was slapped on this country’s largest provider of mobile phone service for failing to disconnect 5.1 million subscribers with unregistered or incompletely registered SIMs before the deadline set by NCC. The penalty represents a N200,000 [$1,005] fine for each SIM card that was not disconnected before the deadline. MTN was also given a deadline of November 15 to pay the fine or else it will face more severe penalties, including a possible suspension of its license.
The fine had an immediate effect on MTN’s business. Shares of its parent company MTN, which is Africa’s largest telecommunications company, crashed more than 12 percent to 167 rand on the Johannesburg Stock Exchange, the biggest fall the firm has suffered in a single day since November 1998. The drop in share prices continued through last week and by week’s end MTN shares, with a total value of 284 billion South African rand or US S21 billion, had plummeted by 20 percent.
MTN Nigeria and its parent company described the fine as excessive. They said they tried to engage NCC on how to resolve the issue but that NCC refused to listen to their plea to reconsider the penalty. MTN Nigeria spokeswoman Chineze Gbenga-Oluwatoye said “recommendations were put forward with respect to the non-commensurable nature of the fine but the Nigerian Communications Commission did not accept recommendations that the fine of 200,000 Naira ($1,005) per SIM was too heavy.”
Mid-last week, Daily Trust reported that National Security Adviser to the President Major General Mohammed Monguno’s office had waded into the matter and taken it over. It quoted a senior federal government official as saying government is now treating the case as a national security issue. The official also said “ONSA took over the case because it was discovered that MTN deliberately wanted to sabotage the fight against kidnapping and insecurity by refusing to disconnect 5.2million unregistered people on its network.”
There are many issues arising out of this dispute. The first one is that the failure by telecom operators to disconnect unregistered or partially registered SIM cards is condemnable and a threat to national security at a time when this country is faced with the murderous Boko Haram insurgency as well as the stepped up activities of kidnappers. The consequences of allowing unregistered or partially registered SIMs to remain connected to the networks became evident during the abduction saga of Chief Olu Falae when MTN reportedly failed to provide details to the police on its SIM cards used by the kidnappers. NCC therefore has every reason to be angry and it has a duty to enforce the disconnection of unregistered SIMs and to punish any operator that refuses to comply with the order.
Yet, the fine of N1.4 trillion is excessive by any standards. This is an amount equal to about a quarter of the Federal Government’s budget. Even though MTN is large and rich by Nigerian standards, it cannot possibly pay such a fine without the threat of going under. A regulatory fine that threatens to destroy this country’s largest telecom operator cannot but cause consternation throughout the economy and society because of the centrality of telecoms in our lives these days. Everyone speaks of the “telecoms revolution” that has transformed Nigeria’s economic and social landscape; the ripple effect would therefore be incalculable.
This is not to say that companies should trample on laws and regulations on the arrogant belief that, as they say in Western countries, “they are too big to fail.” Several players in the telecom industry however said last week that NCC has other ways of enforcing its rules other than fines, unrealistically excessive fines at that. For example, its threat to suspend MTN’s license two weeks from now is thoughtless in the extreme. If it shuts down half of this country’s telecom service overnight, the economy will be damaged incalculably. Also, what message is the government sending to foreign investors, which we are wooing assiduously these days given the near collapse of our oil-based government revenues?
Nor do we agree with the earlier quoted statement by an official of the NSA’s office that MTN is deliberately sabotaging the anti-insurgency war. There is no earthly reason why a corporation such as MTN should wilfully do that. Much more realistically, the corporation failed to carry out the disconnections for commercial reasons. It is totally justified to calculate the earnings made from the 5.2 million undisconnected SIMs and confiscate them, but they should be calculated realistically.
Some telecom operators have also pointed out that NCC itself bears a large measure of blame for the failures of the SIM registration exercise of 2011. Chief Deolu Ogunbanjo, President of the National Association of Telecommunications Subscribers (NATCOMS) said it was NCC that licensed seven agents to undertake SIM registrations in the six geopolitical zones but that due to targets and deadlines given, the registration agents were not asking the complete questions required of SIM card users because they were hurrying to meet deadlines. No wonder the House of Representatives voted last week to probe the N6.1 billion SIM card registration exercise that NCC carried out in 2011.
And so, everything considered, we urge NCC and the Federal Government to find an amicable way to resolve this issue. MTN and any other telecom operator that violates the law should be punished, but this should be done commensurately. All unregistered or partially registered SIM cards should be disconnected and the process of rectifying them should be put in place. We however urge NCC’s new leadership to avoid overzealousness in the discharge of their duties, lest they destroy an industry that has contributed enormously in reshaping the face of Nigeria.