Finally, NCC, MTN Reach Truce as Fine is Reduced to N330bn

  •   Telecom firm to make staggered payment over three years, may list on NSE

By Emma Okonji in Lagos, Dele Ogbodo and Damilola Oyedele in Abuja

The eight months tussle between the Nigerian Communications Commission (NCC) and MTN Nigeria, over the imposition of a whopping N1.04 trillion fine on MTN by the NCC, was finally put to rest yesterday, when both parties arrived at a consensus.

The agreement was that MTN will now pay a reduced fine of N330 billion in a staggered form, within a time limit of three years, and it will be listed on the Nigeria Stock Exchange (NSE), as soon as it is commercially and legally possible to do so.

But in a swift reaction, the House of Representatives Committee on Communications rejected the deal, insisting that the full fine of N1.04 trillion must be paid by the telecommunications firm.

According to statement from NCC, the reduced amount of N330 billion, would include the initial payment of N50 billion earlier made by MTN to the government.

According to the statement, the balance of N280 billion would be made in six tranches within a period of three years.

By the terms of agreement, MTN will pay N30 billion into NCC’s Treasury Single Account (TSA) with the Central Bank of Nigeria (CBN), 30 days from the date of the agreement dated June 10, 2016.

Other dates of payments include: March 31, 2017, (N30 billion);

March 31, 2018, (N55 billion); December 31, 2018, (N55 billion); March 31, 2019, (N55 billion) and the balance will be in May 31, 2019, (N55 billion.)

The agreement and resolutions were signed by the Executive Vice Chairman (EVC) of NCC, Prof. Umar Garb Danbatta; NCC Commission Secretary, Mr. Felix Adeoye; Chief Executive of MTN, Mr. Fredi Moolman and MTN’s Company Secretary, Mrs. Uto Ukpanah, and witnessed by NCC’s Director, Public Affairs, Mr. Tony Ojobo; Chief of Staff to the EVC, Mr. Usman Malah; Assistant Director, Legal, NCC, Ms Helen Obi, and the Corporate Executive, MTN Nigeria, Ms. Amina Oyagbola.

It was also agreed that MTN shall tender an apology in line with the apology previously tendered in correspondences relating to the matter to the government of Nigeria and Nigerians within the one month of the execution of the agreement.

The agreement, which was signed by both parties, also mandated MTN to subscribe to the voluntary observance of the Code of Corporate Governance for the telecoms industry and ensure compulsory compliance when the said Code is made mandatory for the telecommunications industry.

The agreement also compelled MTN to take steps to ensure the listing of its shares on the Nigerian Stock Exchange as soon as commercially and legally possible after the date of execution of the settlement agreement.

Both parties agreed that these terms of settlement cannot be altered, varied, annulled or modified in any respect, except by writing duly executed by both parties; and the terms of settlement constitute all the terms and conditions of the settlement and supersede and replace any previous offers, representations and terms.

In a statement released by MTN, the telecoms company confirmed the settlement with NCC and the federal government.

MTN Nigeria CEO, Ferdi Moolman said: “MTN Nigeria once again offers its most sincere apologies for the series of unfortunate events that led to the imposition of the fine. It was of critical importance to reach a solution that would be of universal benefit to all stakeholders given the importance of the ICT industry in Nigeria and its tremendous impact on socio-economic growth. Along with the authorities, we believe that has been achieved.”

Regarding the company’s undertaking to list, Moolman said: “MTN Nigeria is undoubtedly one of Nigeria’s success stories. Broader public participation exemplifies this.”

Commenting on the final resolution of the NCC fine, MTN Group Executive Chairman, Phutuma Nhleko expressed his thanks to the federal government for the spirit in which the matter was resolved saying, “this is the best outcome for the company, its stakeholders, the federal government and the Nigerian people and the relationship between MTN, the federal government and the NCC has been restored and strengthened.’’

Also pleased with the resolution reached, Danbatta said: “NCC was careful not to take decisions that were likely to cripple the business interest of the operators we regulate. Besides, the downturn of the global economy is biting hard on everybody and every sector, so we must therefore be sensitive and flexible in our decisions.”

At the peak of negotiations between MTN, the NCC and the federal government, the MTN negotiating team was headed by former US Attorney General and Head of Covington & Burling LLP, Washington DC, Mr. Eric H. Holder, Jr., while the government’s team was led by the Attorney General of the Federation (AGF) and Minister of Justice, Mr. Abubakar Malami (SAN).

The President of South Africa, Jacob Zuma, had to also fly into Nigeria to continue negotiation on the matter.

This was after the NCC handed over the matter to the Presidency, at a time the NCC had no governing board to take decision on the matter.

The huge fine of N1.04 trillion, no doubt, caused panic within the management of MTN, which led to the resignation of three top executive officers. The first was the former Chief Executive Officer of MTN Group, Mr. Sifiso Dabengwa who was relieved of his job, but made to resign honourably.

He was immediately replaced by an Acting Executive Chairman, Phuthuma Nhleko.

Few weeks after his resignation, the former Chief Executive Officer of MTN Nigeria, Mr. Michael Ikpoki, and the former Head, Regulatory and Corporate Affairs of MTN Nigeria, Mr. Akinwale Goodluck also resigned from their positions

Both had tendered their resignation letters at the heat of the challenge, occasioned by the N1.04 trillion, which drastically affected the shares of MTN in South Africa.

Since the fine was announced in October 26, MTN stock in South Africa had declined by about 25 per cent, according to Bloomberg report, and the decline continued for some months, having created panic among shareholders.

THISDAY gathered that MTN Group was unhappy with the way the fine issue was handled in Nigeria, blaming it on the structure of MTN management, where CEOs from various regions report directly to Dabendwa, a structure that Dabengwa instituted immediately he was appointed Group CEO of MTN.

The structure was a deviation from the initial structure, where Country specific CEOs report to a regional head, who will in turn report the CEO. The new structure instituted by Dabengwa, made it difficult to address issues fast, since every CEO reports directly to the Group CEO, who takes some time before responding to their queries.

It was gathered that Ikpoki had reported to Dabengwa on the MTN Nigeria fine, but that Dabengwa did not treat the matter as urgent as it should, a situation that made the issue to degenerate.

Ikpoki and Goodluck, who were the most senior management staff of NCC before their forced resignation, were said to have handled the issue with kids glove and allowed MTN to violate such sensitive fine.

Although the NCC said it acted according to the law by imposing N1.04 trillion on MTN, the telecoms regulator, however said it never envisaged that MTN would breach the law on SIM card deactivation to the extent of keeping up to 5.2 million unregistered and improperly registered SIM cards on its network, knowing fully well that each defaulting SIM card, attracts N200,000.

NCC had in October 2015, fined MTN the sum of N1.04 trillion for its refusal to deactivate 5.2 million unregistered and improperly registered SIM cards on its network.

NCC had fixed a penalty of N200,000 for a single infraction on SIM card deactivation and it was discovered that MTN had 5.2 million infractions, which was the number of invalid SIM cards that were not deactivated on the MTN network, which amounted to N1.04 trillion.

After several negotiations and pleas from MTN, the NCC later reduced the fine by 25 per cent, to N780 billion, but MTN was not satisfied with the reduction and decided to seek redress in law court in December 2015, challenging the powers of NCC to impose such a whooping sum on a single operator.

In February 2016, MTN withdrew the case from court on the advice of the federal government, as a condition for a renewed negotiation, which MTN kept asking for.

To appease the federal government, MTN paid N50 billion to government, immediately it withdrew the case and continued in the negotiation for a peaceful resolution of the matter.

House C’ttee Rejects Reduction, Insists on N1.04tr…


Meanwhile, the House of Representatives Committee on Communications has rejected the reduction of the fine slammed on MTN Nigeria, insisting that the full fine of N1.04 trillion must be paid by the telecommunications firm.

It also ordered all parties involved in the matter to stay action pending the outcome of its investigations.

The Committee, led by Hon. Saheed Akinade Fijabi (Oyo APC) summoned the Minister of Communications, Mr. Adebayo Shittu and Danbata to appear before it next Monday, to explain the reduction of the fine, despite the insistence of the House that the fine must be fully paid.

Briefing newsmen yesterday, Fijabi expressed surprise at news of the reduction, adding that it is reneges on an agreement with the Minister, and the NCC and the Attorney General of the Federation, that all negotiations should be suspended until the House concludes its investigations.x