MTN Nigeria fined $5.2 billion; shares see record drop

A BBC report revealed that MTN was fined for non-compliance with a deadline set out by the NCC to disconnect all non-registered sim cards.

 

MTN Nigeria has been fined USD $5.2 billion by Nigeria’s Communications Commission (NCC). This is according to a report by the BBC.

The report revealed that MTN was fined for non-compliance with a deadline set out by the NCC to disconnect all non-registered sim cards.

The move follows accusations by mobile phone users that the regulator had failed to bring operators to account for poor services to subscribers, the report revealed.

According to the report, MTN Nigeria said it was studying the letter sent to it by the regulator and will respond as soon as possible. A senior official of the company said it was in talks with the regulator over the fine and hoped to resolve the matter.

The report further revealed that some Nigerians said that they wanted the regulator to address poor network signals provided by telecoms companies in the country. Additionally, they want more sanctions on firms to encourage them to improve signals and the quality of service in the country.

Statistics from the NCC indicates that Nigeria, a country with estimated population of more than 170 million, has close to 150 million mobile phones.

Shares in MTN extended their losses to more than 10 percent and traded down 9.3 percent lower at 173 rand by 1236 GMT (14:36 SA time).

Meanwhile,  MTN Group Ltd. shares fell the most in almost seven years after the Nigerian telecommunications regulator fined Africa’s biggest wireless company $5.2 billion for failing to disconnect customers with unregistered SIM cards.

The stock declined as much as 13 percent, the most since December 2008, and traded 12 percent lower at 167.23 rand as of 3:55 p.m. in Johannesburg. That values the company at 310 billion rand ($23 billion).

The penalty relates to the timing of the disconnection of 5.1 million MTN Nigeria subscribers in August and September and is based on a fine of 200,000 naira ($1,005) for each unregistered subscriber, Johannesburg-based MTN said in a statement on Monday. MTN Nigeria is in talks with the Nigerian Communications Commission to resolve the matter, the company said.

“$5.2 billion is way, way higher than the profits they’re going to make from Nigeria for many years to come,” Wayne McCurrie, a Pretoria-based money manager at Momentum Asset Management, which owns MTN shares, said by phone. “That fine is totally and utterly out of proportion to whatever regulation they are contravening, if any.”

Forecast Reduced

MTN, which has about 233 million customers in 22 countries in the Middle East and Africa, cut its full-year forecast for subscriber numbers on Oct. 22 after the 5.1 million Nigerian customers were disconnected following a review into how they were able to register for phone contracts. Nigeria is the company’s biggest market, with about 62 million customers at the end of September.

“We acted within our mandate as a regulator,” Tony Ojobo, head of public affairs at the NCC, said by phone. “It is only MTN for which we have been able to establish clear infractions. 5.2 million SIMs had to be forcefully disconnected by the NCC.”

The NCC had ordered all mobile phone companies to register their customers’ SIM cards by August or face sanctions.

“MTN is working flat-out to try and finalize this,” McCurrie said. “That’s an astonishing amount of money.”

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.com.gh