Nigeria slaps $5.2-bn fine on MTN Nigeria

Nigerian regulators have imposed a $5.2-billion fine on telecom operator MTN Nigeria, a subsidiary of South Africa-based MTN Group for failing to disconnect 5.1 million unregistered mobile subscribers.

The Nigerian Communications Commission's (NCC's) penalty is based on 200,000 naira ($1,000) for each unregistered SIM card connection as of its August deadline.

"We had a directive that was given to all the networks to deactivate all unregistered SIM cards on their networks and they had enough time to do that," NCC's director of public affairs Tony Ojobo said.

Further to the news, MTN stock plunged over 12 per cent yesterday on the Johannesburg stock exchange, its biggest one-day fall in nearly 17 years.

According to the regulator, MTN had not denied the infraction and it has deactivated the unregistered connections.

"MTN Nigeria is currently in discussions with the NCC to resolve the matter in recognition of the circumstances that prevailed with regard to these subscribers," the company said in a statement.

Nigeria, Africa's biggest economy, is the country's largest mobile market with over 148 million subscribers and a penetration of about 105 per cent.

The rapid growth in recent years has led to problems with network congestion and quality of service prompting the telecom regulator to take stringent measures.

MTN has the biggest share of Nigeria's mobile market with around 43 per cent. Its rivals include Nigeria's Globacom with a 21-per cent market share, India's Airtel with 20 per cent and UAE's Etisalat with 16 per cent, according to NCC's July data.

The company said that the Nigerian operations recorded a marginal decline in its subscriber base to 62.5 million due to the disconnection of 5.1 million subscribers at the end of August in line with the regulatory requirement.

It added that 3.4 million of these subscribers have been reconnected. But, the company's financial performance continues to be impacted by ongoing regulatory restrictions.

The enormous fine is approximately twice MTN Nigeria's average year's profit, which is one of the Group's most profitable subsidiaries, and nearly thrice the $1.8 billion that the company invested in the African country.

''The penalty is way, way higher than the profits they're going to make from Nigeria for many years to come.  That fine is totally and utterly out of proportion to whatever regulation they are contravening, if any. That's an astonishing amount of money,'' Wayne McCurrie money manager at South Africa's Momentum Asset Management, told Bloomberg.

Johannesburg-based MTN is one of Africa's largest telecom companies with a market capitalisation of around $22.5 billion, and has operations in 22 countries across Africa and the Middle East including South Africa, Nigeria, Ghana, Uganda, Sudan and Iran serving around 231 million customers, as at the end of June.

Two months ago, MTN entered into a deal with Liquid Telecom, an independent provider of data, voice and internet in eastern, central and western Africa, to jointly offer the largest fixed and wireless footprint across the continent.