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N1trn fine: MTN may get deadline extension

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N1trn fine: MTN may get deadline extension

N1trn fine: MTN may get deadline extension
November 16
06:28 2015

 

No obligation to pay today, says telecoms firm

Fine sacrosanct, but may be staggered -NCC
Nigeria’s largest telecoms company, MTN, may be granted an extension to settle the $5.2 billion (about N1.04 trillion) fine imposed on it by the government, New Telegraph has gathered. Expectations across different quarters are that except government changes its decision, MTN is expected to pay the fine before the close of work today.
Feelers from the regulator, the operator and industry stakeholders yesterday suggested a dominant cloud of uncertainty regarding the readi-ness of the telecoms firms to pay the lump sum today at deadline. “The Nigeria Communication Commission (NCC) has not said anything to the contrary and that, to me, implies that all other things being equal, MTN must pay tomorrow (today),” a regulator source told New Telegraph from Abuja yesterday.
The management source, however, said that the issue had gone beyond the regulator/NCC level. “I am aware that there are some high-level talks currently ongoing between MTN and government. What has happened in the past weeks is that the issue is now absolutely beyond the NCC.
“The issue is now between the Federal Government, especially Office of the National Security Adviser (NSA), and the South African Government. So, it is no longer an NCC/ MTN issue; it is being taken over by Buhari’s office,” the source said. Another source disclosed to our correspondent that “there was a meeting between the Nigerian authorities and MTN and South African representatives last Friday, where it was agreed that the payment would not be removed, but that it may be staggered, which means that there could be an extension.”
Also, the Minister of Communications, Adebayo Shittu, who was sworn in last Wednesday, on Friday in an interview with Reuters on the progress of the talks, had said there was “nothing before me.” “If any new thing would happen, there must be initiative from concerned quarters. It is up to MTN,” he added.
According to him, “a judgement has been given, as it were, and the period for enforcement has not yet passed. Nobody wants MTN to die. Nobody wants MTN to shut down.” Since the announcement of the fine, MTN’s shares have lost nearly 25 per cent of their value.
The telecoms company was fined $5.2 billion for failing to de-active some 5.1 million unregistered Subscriber Identity Module (SIM) cards on its network. The NCC had set November 16 deadline (today) for the telecoms company to pay up the fine.
The penalty 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. However, the telecoms company, which maintained it continues to be in talks with government, said it was not under obligation to pay the money today.
“We are still in discussion with the regulator and there is no obligation to pay tomorrow (today),” a top management source of MTN Nigeria told New Telegraph on phone yesterday. The advocacy body of telecoms companies in Nigeria, the Association of Telecoms Companies of Nigeria (ATCON), believes the deadline could be changed.
According to ATCON President, Engr. Lanre Ajayi, though available information showed the deadline is today, no deadline should be considered sacrosanct, but amenable, based on negotiations. “Information we have is that they are still negotiating. I think we should not pre-empt the outcome of what will happen on Monday.
Besides, deadline, anywhere in the world, is not sacrosanct and the deadline can also be shifted. “There is nothing too sacrosanct about a deadline and since they are still in talks, considerations may be given to MTN such that there could be alterations to the deadline, that is, if MTN fails to pay on Monday,” Ajayi said.
Since the news of the sanction broke some weeks back, MTN has not denied its guilt, but rather has been initiating highlevel talks to seek reprieve or fine cut. The MTN Group in South Africa was reported to be making some moves to reduce the amount by as much as 80 per cent and was also considering borrowing money from banks to help settle the penalty, should its request for fine reduction sail through.
“MTN is pushing to reduce the fine by 60 per cent to 80 per cent,” Head of Research of Renaissance Capital (RenCap), Mr. Adesoji Solanke, had said. “MTN is considering borrowing from banks as it recently checked what the banks’ lending capacity to it is.”
There was, however, neither indication at the weekend that the request had been granted by authorities nor that MTN has been able to mobilise funds to pay the fine, even though there were reports that it was being advised by some unidentified banks.
The Director, Public Relations at NCC, Mr. Tony Ojobo, had, in an interview last week, said that the whole issue bordered on respect for rule of law. However, some analysts have said that the size of the fine risked damaging Nigeria’s efforts to shake off its image as a risky frontier market for international investors, though others said it showed Nigerian regulators were keen to enforce the law.
“Paying the fine this month and the licence fee before the end of December could also prove to be a liquidity headache as the company’s cash is spread over more than 20 countries,” said Momentum SP Reid analyst, Sibonginkosi Nyanga. Chief Executive Officer of Lagos-based Financial Derivatives Company Limited, Mr. Bismarck Rewane, said, “though the country cannot tolerate corporate arrogance, but this may also deter other investors because of the size of the fine.” The $5.2 billion fine has, so far, led to the resignation of the Chief Executive Officer of MTN Group, Mr. Sifiso Dabengwa.
A non-executive chairman and former Chief Executive Officer of MTN, Phuthuma Nhleko, was appointed as executive chairman for a maximum of six months. Dabengwa had been chief executive of MTN since 2011 when he took over from Nhleko.
Nhleko said he was trying to get a reduction in the fine demanded by the regulator, saying he would resolve the issue within two weeks, ending November 23. Nigeria is the largest operation of MTN Group with over 43 per cent market share of over 63 million subscribers and over $13 billion investment in the country.

 

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