In the Absence of NCC Board, Decision on MTN Fine Shifts to Presidency

                           

Owing to the absence of a board and concerns over national security, the Nigerian Communications Commission (NCC) is awaiting the directive of presidency on whether to insist on the payment of the N1.04 trillion ($5.2 billion) it imposed on MTN Nigeria, accept staggered payments as offered by the firm, or reduce the fine all together.

This is just as the network operator’s parent company in South Africa – MTN Group – announced  monday that it had secured more time to negotiate the fine that has shaved almost a quarter of the market value from Africa’s biggest mobile phone company in the past three weeks.

“Shareholders are advised that the Nigerian authorities have, without prejudice, agreed that the imposed fine will not be payable until the negotiations have been concluded,” MTN said in a statement from Johannesburg monday.

NCC had previously set a deadline of November 16 for settlement of the penalty.
It imposed the levy on MTN for failing to meet a deadline to disconnect 5.2 million unregistered subscribers earlier this year.
According to Bloomberg, the company’s shares have lost about 24 per cent of their value since the fine was made public on October 26, and traded 0.2 per cent lower at 144.71 rand as of 10:22 am in Johannesburg. That values the company at 267 billion rand ($18.6 billion).
Chairman Phuthuma Nhleko, 55, agreed to take over at MTN a week ago after Chief Executive Officer Sifiso Dabengwa announced his resignation as a result of the fine.

Nhleko returns four years after ending a nine-year spell as CEO during which the share price gained about 1,000 per cent. He vowed to lead negotiations with the NCC and has met with the regulator, MTN said.

Nigeria accounts for the company’s biggest market with more than 62 million subscribers, about a third of the population.
“These discussions include matters of non-compliance and the remedial measures that may have to be adopted to address this,” MTN said.
However, THISDAY gathered from a top NCC source that the regulator’s decision on MTN’s letter last week in which it acknowledged the infraction and requested for leniency would be dependent on the decision taken by the presidency.

Speaking to THISDAY last night, he confirmed this newspaper’s exclusive report that Nkhelo had led the MTN team to a meeting with the president’s Chief of Staff, Alhaji Abba Kyari and NCC officials led by its Executive Vice Chairman, Prof. Umaru Danbatta, last Friday at the Presidential Villa, and had tabled a proposal for staggered payments of the fine.

“However, the final decision on whether to insist on the fine, reduce it, or accept staggered payments would depend on the decision of the presidency,” he said.

The NCC official clarified that the ball had been shifted to the presidency’s court due to the absence of an NCC board, which ordinarily should have taken the decision on MTN’s request for leniency.

“As an independent regulator, we should have taken the decision on the fine. But the absence of a board and security concerns that had arisen over MTN’s non-compliance with the directive on the disconnection of unregistered SIMs, have shifted the onus on the presidency which will direct us on the next step,” he said.

He also revealed that the reason MTN got the temporary reprieve on yesterday’s deadline stemmed from the letter NCC wrote to the network operator acknowledging receipt of MTN’s letter and informing it that its request for leniency was being considered.

“When operators write to us seeking leniency, once we write back acknowledging receipt of their letter and informing them that their request is being considered, that implies that the initial deadline for payment of the fine has been reviewed.

“This was the reason MTN Group issued a statement in South Africa announcing it had secured more time to continue negotiations on the fine. But note that the fine has not been waived by us or the federal government,” he said.

Meanwhile, NCC has revealed that it imposed fines on all mobile phone operators in the country over the non-compliance with its SIM deactivation directive, but only MTN failed to cough up the fine.

Its Director of Public Affairs, Mr. Tony Ojobo, in a press statement monday, said NCC fined Globacom N7.4 million, Etisalat N7 million, Airtel N3.8 million and MTN N102.2 million.

“The fines, imposed in August 2015, were paid by all the telcos apart from MTN,” he said.
Ojobo gave more insight that led to the imposition of heavy sanctions on the largest mobile operator in Africa, stating: “Following the sanctions placed on MTN Nigeria, by the Nigerian Communications Commission (NCC), members of the public have expressed diverse interest as to what actually transpired.

“The fine was a result of violation of Section 20(1) of the Registration of Telephone Subscribers Regulation of 2011.
“Section 20 (1) of Registration of Telephone Subscribers Regulations 2011 states that: ‘Any licensee who activates or fails to deactivate a subscription medium in violation of any provision of these Regulations is liable to a penalty of N200,000.00 for each unregistered but activated subscription medium.’

“The fine of N1.04 trillion on MTN Nigeria by the Nigerian Communications Commission (NCC) was done in the interest of the public which has been at the receiving end of security challenges.

“Consequent upon the overwhelming evidence of non-compliance, and obvious disregard to the rule of engagement by MTN, the NCC had no choice but to impose the sanctions.

“MTN, in a letter of November 2, 2015 admitted the infraction and pleaded for leniency. The Commission has acknowledged this and is looking into their plea without any prejudice to the fine. The fine remains but the appeal and other engagements with MTN may affect the payment deadline.

“The fine that was imposed on MTN was the second within two months after the operators were given a seven-day ultimatum to deactivate all unregistered and improperly registered Subscriber Identification Module (SIM) cards. While others complied, MTN did not.

“On August 4, 2015, at a meeting of all the representatives of the mobile network operators (MNOs), with NCC, major security challenges through pre-registered, unregistered and improperly registered SIM Cards topped the agenda after which operators were given the ultimatum to deactivate such within seven days.

“On August 14, 2015, three days after the ultimatum expired, NCC carried out a network audit, while other operators complied with the directive to deactivate the improperly registered SIM Cards, MTN showed no sign of compliance at all.

“Please recall that four operators – MTN, Airtel, Globacom and Etisalat – were sanctioned in August for none compliance with the directive to deactivate the improperly registered SIM cards.

"MTN got a fine of N102.2Million, Globacom N7.4Million, Etisalat N7Million and Airtel N3.8Million fine.  Others complied while MTN flouted the fine.”

Ojobo said based on the report of the compliance audit team, an enforcement team visited MTN from September 2 - 4, 2015.
MTN, he noted, admitted that the team confirmed that 5.2 million improperly registered SIM cards were still left active on their network, “hence a contravention of the regulations was established”.

“Consistent with the commission’s enforcement process, MTN was by a letter dated October 5, 2015, given notice to state why it should not be sanctioned in line with the regulations for failure to deactivate improperly registered SIM Cards that were found to be active at the time of the enforcement team’s visit of September 15, 2015.

“On October 19, 2015, the commission received and reviewed MTN’s response and found no convincing evidence why it should not be sanctioned for the established violations.

“Accordingly, by a letter dated October 20, 2015 the commission conveyed appropriate sanctions to MTN in accordance with regulations 20(1) of the Telephone Subscribers Registration Regulation 2011 to pay the sum of N200,000 only for each of the 5.2 million improperly registered SIM cards,” he said.

Ojobo added that in order to ensure proper identification of telephone subscribers with their biometric data and in line with international best practice, the commission came up with a framework for the registration of telephone subscribers in Nigeria.

“The above regulations were developed with the full participation of all key industry stakeholders including all MNOs in 2011.

“The commission on its part has a statutory responsibility to monitor and enforce compliance to the rules. More so, when national security is at stake,” he explained.