The withdrawal of the case that was instituted against NCC by MTN, and the subsequent payment of N50 billion by the telecom firm, is a show of MTN’s bid to douse the heightened tension between it and the NCC in order to open fresh opportunities for dialogue and settlement, writes Emma Okonji
The Nigerian Communications Commission (NCC), the telecoms industry regulatory body, on October 26, 2015, in a surprise but decisive move imposed a whopping N1.04 trillion fine on MTN Nigeria for contravening its directives on SIM card deactivation.
Although NCC said it acted according to the law establishing the NCC Act of 2003, but the fine became a subject of discussion within and outside Nigeria because of the huge amount involved. In the history of Nigeria, no regulatory body or government at all tiers, has imposed such huge fine on any organisation, not even on oil companies that polluted the aquatic life of the Niger-Delta region.
Having been convinced that it could not let go such amount of money and still remain in business, MTN decided to be diplomatic in handling the matter. One of its diplomacy strategy was a plea bargain it opened with NCC and the Federal Government, before resorting to court action to seek legal redress, when the plea bargain appeared unsuccessful. Although the court action was viewed as a strategy to beat the December 31, 2015 deadline given by NCC for the fine to be paid, MTN did not discontinue with its plea bargain, but continued to appeal to NCC and the Federal Government to drop the fine against it.
Last week, MTN announced that it had paid N50 billion to the Federal Government and had also withdrawn the case from court, as steps toward amicable resolution of the issue.
After four months of calculated delay in paying the N1.04 trillion fine imposed on MTN by the NCC, MTN, last week, decided to pay N50 billion as part of the fine, and went ahead to withdraw the case. Although the action of MTN was said to be a precondition given to it by government for amicable resolution of the issue, MTN was believed to have accepted the condition since it will open avenues for it to continue to press government to rescind its decision on the fine.
MTN Nigeria Chief Executive Officer, Mr. Ferdi Moolman, speaking on the issue said: “This is a most encouraging development. It demonstrates a willingness and sincerity by both parties to work together towards a positive outcome”.
He explained that MTN Nigeria had paid N50 billion to the federal government as a gesture of good faith and commitment to continued efforts towards an amicable resolution.
Impact of N1.04 trillion fine
Just like the thoughts of MTN management, many telecoms analysts and subscribers have said that the N1.04 trillion fine was outrageous and capable of putting MTN out of business, but the fact remains that there was an infraction on the part of MTN and the law has to take its course. When the infraction of MTN is placed side by side with the law, which stipulates that a single infraction on SIM card attracts N200,000 and it was discovered that MTN had 5.2 million infractions, a simple Mathematics explains it clearly that 5.2 million infractions at the rate of N200,000 per infraction, amounts to N1.04 trillion. Yes, it has been established that MTN infractions attracted N1.04 trillion, but the issue now is that MTN has said it cannot pay such amount of money and still remain in business.
However, the consolidated statement of MTN Nigeria and its subsidiary as at December 31, 2014, which was exclusively obtained by THISDAY, showed that the company had current assets comprising inventories, trade and other receivables, current investment, restricted cash, and cash and cash equivalents of N402 billion.
The amount is far less than the 25 per cent reduced fine of N780 billion, talk less of the actual fine of N1.04 trillion.
MTN’s profit and loss accounts showed that it posted revenues of N824.8 billion, a profit before tax of N290.6 billion and profit after tax of N209 billion in 2014.
MTN’s unaudited (management) accounts up till December 31, 2015, showed that its total cash and investment available stood at N355 billion.
Going by the financial statistics, it is obvious that MTN cannot pay such fine. The issue therefore is that should MTN be forced to face the law, and go out of business that is sustaining millions of Nigerians through direct and indirect employment? The impact of the fine is huge both on MTN and the Nigerian economy, especially now when the federal government is trying to reduce unemployment rate by creating jobs. Financial analysts have however warned that government must put the interest of the country above other interests.
Why fine was imposed
NCC, which imposed the N1.04 trillion fine on MTN, had at some point, expressed surprises over the huge amount of the fine, but has continued to insist that there are laws guiding the regulatory powers of NCC and that the laws must be upheld.
According to the Director, Public Affairs of NCC, Mr. Tony Ojobo, “There is a law guiding SIM card registration and the law is not new. It has been there since 2011, and MTN is a signatory to the law, just like every other licensed telecoms operator in the country.”
According to Ojobo, the growing concern over insecurity in the country, prompted the Office of the National Security Adviser (ONSA), to hold a meeting with NCC and telecoms operators, where the operators were advised to deactivate all unregistered and improperly registered SIM cards on their networks.
It was believed that most crimes committed in the country like kidnapping and armed robbery, were perpetuated using unregistered SIM cards for communication, knowing fully well that they could not be traced because their SIM cards were not registered. After close monitoring, NCC discovered that only MTN refused to carry out the instruction of unregistered SIM deactivation, among other operators. Despite repeated warning, MTN still refused to deactivate the 5.2 million unregistered and improperly registered line on its network, and NCC had no option than to fine MTN in line with the law.
Fine as Litmus Test on NCC’s law
All eyes are on NCC to see how best it will handle the issue of MTN fine, even though NCC had consistently said the Presidency, through the Office of the National Adviser, is already handling the matter.
Ojobo had however told Nigerians that NCC acted according to law, based on the number of unregistered SIM cards found on the MTN’s network, amounting to 5.2 million, despite repeated warnings from NCC, which MTN did not heed to.
He also said the action of MTN to drag NCC to court on the issue of SIM card, was an opportunity to test the powers of the NCC law in court. But the withdrawal of the case last week, seems to have vindicated NCC.
Fine and the human face of government
As mixed reactions greet the manner in which government is handling the MTN fine issue, most Nigerians have however commended government for showing human face on the matter. According to them, if government had decided to force MTN to pay the N1.04 trillion fine, NCC would have long enforced the payment or better still, withdrew the licence of MTN, without minding the huge economic effect in the area of job loss.
Now that MTN has withdrawn the case, as directed by government, the action will no doubt open a new vista of opportunities for MTN to address and conclude on the matter.
Many may have blamed government for being too soft in handling the issue with the NCC fine, but the truth remained that government may have considered the interest of the country, hence it decided to play along with MTN diplomacy. But whether MTN will be allowed to pay less than the N1.04 trillion fine or not, the truth is that MTN must have learnt its lessons about respect for extant laws.