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Fine threatens to bankrupt MTN Nigeria: CEO

 

The $3.9 billion (R59 billion) fine imposed on MTN Nigeria by the Nigerian Communications Commission (NCC) could bankrupt the mobile phone operator as it represents 95% of its annual turnover, MTN’s Nigeria CEO Ferdi Moolman told Leadership newspaper. By Staff Writer


Africa’s largest mobile phone operator was given a December 31 deadline to pay the fine for its failure to disconnect 5.2 million subscribers who did not register their SIM cards.

The payment deadline has expired.

The South African-based telco has hired seven Senior Advocates of Nigeria (SAN) to fight the R59 billion fine in the Federal High Court in Lagos. The initial fine was $5.2 billion and was in December reduced to $3.9 billion.

Speaking with the Nigerian media at the weekend, Moolman acknowledged the tough operating environment MTN has found itself.

The Leadership newspaper reported  that Moolman noted that though the fine was harsh on the mobile operator but said MTN has learnt its lessons from it and would work to restore relationship with the regulator, stakeholders and its customers.

“I see a situation where the relationship with NCC is restored in the interest of the Nigerian public, where we start providing services again to the Nigerian public together with the NCC,” he was quoted by the newspaper.

Moolman added that the amount was about 95 per cent of the company’s total revenue for a year.

“The size of the fine blows my mind when you start looking at the figure. It is huge, it is massive. How do you fix it, what do you do? Operating in the telecom world has become challenging.”

Furthermore, ThisDay newspaper reported that it has secured exclusively from an NCC source the financials of MTN Nigeria for the period to end-December 2015 that were presented to the Nigerian watchdog, when the mobile phone operator was pleading for leniency.

The paper said according to the documents, MTN Nigeria’s  total cash and investment available stood at 355 billion naira, which was was available to run the business.

In the documents, MTN showed it had a shareholders’ fund (capital of the business) of about 260 billion naira, including the 2015 profit after income tax of about 190 billion naira (unaudited) and historical profit of about 6 billion naira. Its loan repayments and annual capital re-investments (which averaged about 200 billion naira in the past five years) are funded with the profit and loans obtained from local and foreign banks.

When contacted on its financial statements, an MTN official confirmed to ThisDay newspaper that the company had made the presentation to NCC and the federal government, adding, however, that the Nigerian government had remained adamant that the fine must be paid.

“We hope that we can get a reprieve and will keep meeting with the federal government while the matter is in court to arrive at an amicable settlement. We have learnt our lesson, but the government should not kill the business and throw thousands in the job market at a time like this,” ThisDay quoted the MTN official.

The Nigerian authorities have promised to wait for the outcome of a court challenge filed by MTN before deciding on whether to enforce a R59 billion fine.

On SIM registration, Moolman told Leadership newspaper that a solid database of MTN’s subscribers was key to the next phase of the telecommunications revolution, especially in the area of broadband provisioning. He said it had commenced a complete re-registration of all its more than 63 million subscribers in Nigeria.

 

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