South Africa’s MTN Group is ready to stand up to the Nigerian Communications Commission (NCC) and will challenge the regulator’s powers to impose a $3.9 billion fine on its Nigerian subsidiary by the regulator. The telecommunications company will file a case against the regulator before a Federal High Court in Lagos. As it disclosed this, the company also said it had paid 75 billion CFA francs ($124 million) to extend its operating license in Ivory Coast and would pay $67.5 million in Ghana to buy a 15-year radio frequency spectrum for high-speed networks.
NCC had slammed an initial $5.2 billion fine on MTN for failing to meet a deadline to disconnect 5.1 million unregistered subscribers. The fine was later cut by 25 percent to $3.9 billion and a deadline of Dec. 31 was given for the payment. But MTN believes “there are valid grounds upon which to challenge the fine,” and will, therefore, “seek the appropriate reliefs from court”.
While that is ongoing, MTN Chairman Phuthuma Nhleko is leading negotiations with the NCC to try and ensure an amicable resolution.
MTN’s $196 million total payment for operating licences in Ghana and Ivory Coast shows the telco remains keen about West Africa despite the troubles it faces in Nigeria, its largest market. The penalty the company faces in Nigeria has made the company lose 28 percent of its value. The reduced fine is over 30 percent of its 2014 group revenue and 95 percent of MTN Nigeria’s revenue in the same year. It will be hard to pay such fine, amid slowing growth. But Nigeria remains a very important market to MTN. The company paid $94.2 million to renew its operating licence in the country till 2021.
The Johannesburg-based wireless operator’s decision to drag NCC to court is expected to buy it some time during which it would hope to arrive at an amicable resolution with the regulator and strengthen its business. The company is expected to end the year in a rather good position, as the recent market recovery in South Africa has seen the company gain 6.3 percent. It also not need worry about the fine in Nigeria as no action is expected to be taken against it pending the court hearing.