Nigerian Phone Companies Fined for Missing Quality Goals

Feb. 25 (Bloomberg) -- Nigeria’s telecommunications regulator fined its three biggest mobile operators 647.5 million naira ($4 million) and toughened penalties, showing waning tolerance for poor service in Africa’s second-biggest economy.

MTN Group Ltd., the Johannesburg-based market leader, and Bharti Airtel Ltd.’s third-ranked local unit must pay 185 million naira each, while Globacom Ltd. was fined 277.5 million naira for not meeting set targets including measures of connection quality, dropped calls and congestion in January, the Nigerian Communications Commission said in a statement yesterday. They’re prohibited from selling new SIM cards in March, the first time the punishment was imposed along with a financial penalty, said Tony Ojobo, the regulator’s director of public affairs.

“It can be argued that the latest sanctions of 647.5 million naira on three operators over quality of service breaches for a single month are by far the most punitive,” Kenechi Okeleke, senior analyst for ICT Research at Business Monitor for the Middle East and Africa, said by e-mail today.

Nigeria had 156 million mobile-phone connected subscriptions as of October 2013, according to the commission. User numbers are expected to grow to more than 200 million in 2017, London-based research company Informa Telecoms & Media estimates. Information and Communication Technology Minister Omobola Johnson said in a Feb. 10 interview that authorities were considering stopping SIM-card sales to force service improvements.

Market’s Surge

The commission has repeatedly fined companies for failing to meet quality standards as demand surged in Africa’s most populous nation of about 170 million people. From 2010 through 2013, Nigeria’s four main phone companies grew 78 percent, or by about 53 million subscriptions, according to Business Monitor’s estimates.

The threat of further regulatory sanctions is likely to keep mobile-phone companies’ capital investments high to match the growth in demand, Okeleke said.

“We also expect an uptick in network and tower outsourcing to third-party vendors with high performance targets,” he said.

Ericsson AB said on Feb. 19 that it won a five-year order to run 75 percent of MTN’s network in Nigeria. The Stockholm-based company opened a regional service center in Nigeria in an effort to convince operators that it’s more efficient to contract out management of their networks, Kamar Abass, managing director of the Swedish company’s Nigerian business and head of regional accounts for sub-Saharan Africa, said in an Aug. 27 interview.

Huawei Deal

Huawei Technologies Co. said in a statement today that it will run information-technology services for Emirates Telecommunications Corp.’s Etisalat Nigeria so the mobile operator can create “more value for its customers.” The Shenzhen, China-based company has also set up a service center in Nigeria, established last year.

Etisalat, which has been fined in the past, was the only operator among the top four in Nigeria that wasn’t penalized this time around.

“We will continue to expand our network capabilities, reach and capacity to ensure we meet the communication needs of our customers,” Chineze Amanfo, a spokeswoman for Etisalat, said in an e-mailed response to questions.

Funmi Onajide, a spokeswoman for MTN Nigeria, declined to comment. Emeka Opara, an Airtel Nigeria spokesman, said the company couldn’t immediately comment. Charles Ikoabasi, a spokesman for No. 2-ranked Globacom, didn’t reply an e-mailed requests for comment.

To contact the reporter on this story: Yinka Ibukun in Lagos at yibukun@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net