MTN Fine Cut by Nigeria President Shows Goodwill, Regulator Says

  • Nigerian government doesn't want to scare off investors
  • Regulator has been lenient in the past, spokesman says

Nigeria’s presidency approved the reduction of MTN Group Ltd.’s record fine, showing goodwill toward Africa’s largest phone company after it breached the law and endangered security, according to the telecommunications regulator.

“The government doesn’t want to seem as if it’s anti-investment, the fine was huge, considering our environment and the investment that’s still required,” Tony Ojobo, a spokesman for the Nigerian Communications Commission, said in an interview in Lagos, the commercial capital on Friday. “What was approved by the presidency was 25 percent,” he said referring to the discount from $5.2 billion to $3.9 billion made this week.

The regulator fined MTN in October after it failed to disconnect 5.1 million unregistered subscribers. Nigerian security agencies want all lines registered to fight crime in a country of about 170 million with poor identity records. Nigeria faces an insurgency in the northeast and frequent kidnappings for ransom. The law mandates a fine of 200,000 naira ($1,005) for each unregistered line.

MTN announced Thursday the fine was reduced to $3.4 billion. On Friday, the regulator said that there had been a typographical error and that the fine had actually been reduced to $3.9 billion, sending its stock plunging. The office of President Muhammadu Buhari has declined to publicly comment on its involvement in talks with MTN.

‘Errors Happen’

“Errors happen,” Ojobo said. “That there was even a discussion, that was magnanimous enough. Otherwise, when there is a sanction established by law, you have to pay.” Presidential spokesman Femi Adesina declined to comment.

MTN led the introduction of mobile phones in Nigeria in 2001 and the Johannesburg-based company is the market leader with 63 million lines out of 149 million in Africa’s most populous nation.

The four major phone companies in Nigeria have regularly been fined smaller amounts in the past for regulatory infractions. Those penalties served as just a “slap on the wrist” and didn’t discourage bad behavior, Ojobo said.

“The commission had been lenient a number of times in a number of ways just to allow the industry to grow,” Ojobo said. “We’re now mature. We can’t allow certain things.”

MTN’s chairman, Phuthuma Nhleko, took an executive position in November and led negotiations with the NCC after Chief Executive Officer Sifiso Dabengwa resigned. The initial fine of $5.2 billion was more than MTN’s total sales in Nigeria in 2014 and the equivalent of about 37 percent of all the group’s revenue. Nigerian Chief Executive Officer Michael Ikpoki has also resigned. MTN is working to further reduce the fine, a person familiar with the matter said on Thursday.

The regulator believed the threat of the fine would lead to full compliance, Ojobo said.

“We didn’t expect that there would be disobedience,” Ojobo said. “For us, actually, we were really surprised when our people got there to discover the number of unregistered lines that were still functional.”

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