Nigeria’s telecommunications regulator-NCC recently
fined MTN $5.2 billion, wiping almost 20 percent off its market value over the
space of four days. The incident has brought to light the high level of risk when
doing business in Nigeria. Many observers wonder how NCC arrived at the staggering
fine which is the total National budget for most African countries. Some media
commentaries also speculate that it may be a calculated attempt to halt the Nation’s
largest GSM operators operation in Nigeria.
MTN Nigeria is currently the largest
employer of Labour in the communications sector and is also the single source
of income for hundreds of telecom service start-ups across Nigeria. It has
millions of dollars in infrastructure and has also invested largely in the
booming Nigerian entertainment industry. Such a fine will definitely have a trickledown
effect on thousands of Nigerians.
 |
| MTN Nigeria MD, Mike Ikpoki |
While Johannesburg-based MTN is in talks with
Nigerian authorities over the penalty, imposed for failing to disconnect
customers with unregistered SIM cards and having incomplete data, failure to
negotiate a lower sanction means the company will be paying away more than
double the group’s estimated net income for 2015. It also exceeds sales of
almost 54 billion rand ($3.9 billion) that the operator made in Nigeria in
2014, about 37 percent of total revenue.
After buying one of four Nigerian mobile-phone
licenses for $285 million, MTN went from handling its first call in the West
African country in 2001 to being the market leader with more than 62.5 million
customers. Over the same period, its share price on the Johannesburg Stock
Exchange soared more than sixfold as the company expanded from its home base
into more than 20 countries in the Middle East, Asia, Africa and in Cyprus.
A full payment would exceed the revenue the Nigerian
government made from oil in the second-quarter, and be more than double the
state’s non-crude proceeds, according to central bank data.
Trading in MTN’s shares was halted more than three
hours after rebounding from a decline of as much as 9.7 percent. The dispute with MTN also comes as the
economy struggles to cope with sliding oil prices, currency restrictions and no
finance minister, with growth at its slowest pace this decade. The dispute couldn’t
come at a worse time for MTN, with the company’s 15-year license up for
renewal.
Source:
Bloomberg
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