MTN offers to pay N300 billion ($1.5bn) to settle record $3.9bn NCC fine

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MTN proposed to pay 300-billion naira ($1.5bn) to settle a record $3.9bn fine in Nigeria for missing a deadline to disconnect unregistered subscribers, according to a document handed to reporters in the Nigerian Senate.

Africa’s biggest cellular services company made the offer to settle a dispute that has been running since the fine was first imposed by Nigerian regulators in October.

The country’s Senate Committee on Communications met to discuss the matter on Thursday, and concluded that the negotiations with MTN must continue, with the involvement of Minister of Communications Adebayo Shittu.

MTN shares have declined more than 23% since the fine was made public on October 26, valuing the company at R272bn.

The penalty was imposed for missing a deadline to disconnect 5.1-million subscribers deemed by the government to be improperly registered in a country that is battling with security issues including Boko Haram’s Islamist insurgency.

MTN’s management, the Nigerian Communications Commission (NCC), and Mr Shittu must report back to the Senate in two weeks with the outcome of discussions, according to the committee.

On Tuesday, Nigerian President Muhammadu Buhari rebuked MTN in front of his South African counterpart, Jacob Zuma.

In his first public comments on the matter, the Nigerian president said MTN had been punished for being slow to disconnect phone lines used by Boko Haram insurgents, contributing to casualties in a conflict that has claimed about 10,000 Nigerian lives.

While Mr Buhari’s comments to reporters in Abuja came during a news conference alongside Mr Zuma, the South African president did not respond to the accusation levelled at his country’s third-biggest company.

MTN’s decision in December to challenge the fine in a Nigerian court was also criticised by Mr Buhari, who said it was an attempt to “virtually disarm” the government.

The phone company has since withdrawn the court case and made a 50-billion naira ($251m) payment in order to continue negotiations on the penalty, which exceeds MTN’s revenue from the country last year.

“Everyone has gone back to playing hardball after MTN withdrew its court case,” said Dominic Cull, a regulatory lawyer at Cape Town-based Ellipsis Regulatory Solutions.

“There’s still a lot of game-playing to be done before it becomes clear if the Nigerian government will be a bit more lenient towards MTN,” he said.

MTN’s problems in Nigeria, a lucrative market with scope for growth, have extended to the withdrawal of services by regulators for failing to meet phone-quality standards, which contributed to a 51% fall last year earnings. (Bloomberg)

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