Ogunbanjo: Reduction in MTN Fine, Good for Business Growth


The President, National Association of Telecoms Subscribers, Chief Deolu Ogunbanjo, spoke to Emma Okonji on the controversies surrounding the recent reduction in the fine imposed on MTN by the NCC, insisting that it was in the best interest of the Nigerian economy. Excerpts:

NCC announced recently that it had further reduced MTN fine from N780 billion to N33 billion, having initially reduced the fine from N1.04 trillion to N78 billon. What is your view on the reductions?

It is a better decision and a welcomed development to finally reduce the MTN fine to N33 billion. The issue of the fine lingered for too long, and within that period, it impacted negatively on business, both in South Africa and in Nigeria. In South Africa, the shares of MTN dropped, because traders were cautious to trade on the MTN shares and it created a lot of panic among shareholders. In Nigeria, the ripple effect of the fine played up in the auction of the nation’s 2.6GH spectrum licence, which the NCC had slated for auction. Operators were skeptical to indicate their interest to bid, because they were not too sure of the safety of the business environment in the country, where the regulator could slam as much as N1.04 trillion on a single operator and still expects the operator to survive. So in my view, I think the reduction of the fine was in the best interest of the Nigerian economy, because it will not only raise operators’ confidence in their regulator, but will also boost business growth in the country.

Members of the House Committee on Communications are not happy that the fine was reduced and had summoned NCC and the Minister of Communications to explain their roles in the reductions. What do you have to say concerning the agitation?

Their agitation is not necessary because MTN has made it clear during its negotiations, that it will not be able to pay such whopping amount as fine, and I believe the telecoms company spoke the truth. I think the law makers should consider the effect of the fine on the Nigerian economy, should MTN be compelled to pay the fine. The Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, last week, drew the attention of the House of Reps, on the need for them to cooperate with NCC on matters of telecoms regulation. He stressed the need for striking a balance in satisfying diverse stakeholders in the industry, and I hope they listen to NCC and play cool.

It took NCC and the federal government eight months to finally end the issue of the fine. How will you assess the federal government’s involvement in handling the matter?

It is really sad that the issue of the MTN N1.04 trillion fine dragged on for eight months, despite the intervention of the presidency in the matter. For me, I think I am not satisfied with the way the federal government handled the matter, making it to prolong unnecessarily. The federal government failed in the proper handling of the matter. The NCC reported the matter to the presidency to take action, because NCC had no governing board to take final decision on the matter. But instead of the presidency handling the matter in a more profitable way, they shut out the NCC from the negotiating table and was insisting on MTN paying the full fine, even after NCC had reduced it by 25 per cent to N780 billion. The President of South Africa, Jacob Zuma was in Nigeria to negotiate on the same matter because MTN is a South African company, yet the federal government could not conclude on the matter. In the process of dragging the matter, the National Assembly members came up to compound issues, insisting they need to legislate on the matter, which ordinarily the federal government would have taking decision on it a long time ago.
It would have been a simple matter, if the federal government had given NCC the veto power to decide on the matter, because I know the NCC would have weighed the implications of the fine and would have long reduced it.

Do you think that NCC’s action of slamming N1.04trn on MTN was justified?

Yes, the Nigerian Communications Commission (NCC) acted in accordance with its position as the regulator of the telecoms industry by keeping operators in check, especially when there is a rule and agreements have been reached and signed. But be that as it may, Nigerians felt that the fine was rather outrageous for a single company like MTN to pay and still remain in business, more so that the company is the key to the growth of the Nigerian economy, creating millions of direct and indirect jobs for Nigeria. The penalty is the highest anywhere in the world and that was the reason it generated several reactions and comments from the Nigerian community and the international communities.
Like I said, earlier, the action of NCC was justified but minimal fine should have been given to MTN, since fines are supposed to be corrective measures and not punitive measures.
It is obvious that MTN erred by having up to 5.2 million infractions of invalid SIM cards on its network, amounting to N1.04 trillion, since the agreed penalty for a single infraction is N200,000, but my argument is that N1.04 trillion fine is unimaginable and could force MTN out of business if compelled to pay. So I expected NCC to have made it clear to MTN what the fine amounted to, and then use its regulatory power to cut down on the fine to a reasonable amount that MTN can pay knowing the company’s annual turnover.

How did the fine impact negatively on MTN business and the Nigerian economy?

First of all, it led to job loss of the former Chief Executive Officer of MTN Group, Mr. Sifiso Dabengwa. Here in Nigeria, it also led to the loss of jobs of the former Chief Executive Officer of MTN Nigeria, Mr. Mike Ikpoki and the former Corporate Services Executive Officer, Mr. Wale Goodluck. The three of them were asked to resign on account of the fine because the management of MTN accused them of not handling the matter properly, hence MTN Nigeria incurred as much as N1.04.trillion fine in a single swoop.
Millions of Nigerians who are directly and indirectly employed by MTN, would have lost out, if MTN Nigeria was forced to pay the fine and fold up.
MTN has the largest number of subscribers in the telecoms space, contributing the highest to Nigerian GDP, compared to other operators that have lesser subscriber number. What this means is that MTN contribution to GDP will no longer be forthcoming if the company was forced to pay the amount and eventually go out of business.
NCC had told Nigerians that telecoms contribution to GDP rose by 0.5 per cent in the first quarter of the year, amounting to over N1.4 trillion, and I am very sure that MTN’s contribution in the N1.4 trillion, is the highest among the operator and such company should not be allowed to go down in business, because it will negatively impact on the country’s economy.

What lessons did you expect MTN to have learnt from all of these?

MTN should know that the pen is mightier than the sword and must learn to obey constituted authority. MTN should put aside impunity, even if it is the biggest network in the country and obey rules and regulations of the telecoms industry regulator. I am sure they must have learnt their lessons, hence it continued to seek amicable negotiations with the NCC and the federal government, until the matter was resolved penultimate week.

At the early part when NCC slammed the N1.04 trillion fine on MTN, NATCOMS went to court to challenge the powers of NCC for slamming such a huge sum as fine, but later withdrew the case. Why did NATCOMS withdrew the case?

We as NATCOMS had to go to court to challenge the the powers of NCC to slam a fine as much as N1.04 trillion on a single operator, became we felt the fine was unrealistic, if actually NCC wanted the operator, which is MTN to remain in business. We looked at the impact that such huge fine could cause on the over 62 million subscribers that are on the MTN network, and we felt that all the over 62 million subscribers, which included my humble self, would lose a great deal, if we allow NCC to implement its decision concerning the fine. The fine was actually three times the annual turnover of MTN and we knew that MTN cannot release its annual turnover for three years yo pay just fine and still remain in business, hence we went to court to stop NCC from implementing it. However, after we had filed the case at the Federal High Court in Lagos and the hearing commenced, MTN went and filed a counter lawsuit against NATCOMS, insisting that we had no authority as a community of subscribers to challenge NCC in court, and I guess that MTN had to do that because they were at that time, strongly negotiating and appealing to NCC to reduce the fine and they did not want anything that could aggravate the fine matter between the operator and the regulator. For that reason, we quietly withdrew our case.

But the same MTN that accused NATCOMS of not having the authority to challenge NCC in court over MTN’s case, also went to the same Federal High Court in December 2015 to challenge the powers of NCC to slam MTN with such huge amount. So why the contradiction?

We were baffled at MTN’s double positions in the matter, because it was after we had withdrew the case from court in November 2015, that MTN filed its own case in December 2015, on the same matter, but again, I also guess that MTN had to go to court because it discovered that its negotiations with NCC were not working out and that there was need to beat the December 31, 2015 date, which NCC gave them as deadline to pay the fine. Again, after NATCOMS withdrew the case from court, radio stations and print media in South Africa started attacking MTN in their broadcast and print reports, questioning the rationale for forcing NATCOMS to withdraw its case. I guess that all these, put together, may have promoted MTN to go to court themselves to challenge NCC on the fine issue.

What is the view of NATCOMS concerning the Communications Tax Bill that is before the National Assembly, seeking nine per cent additional task on all telecoms equipment and services?

What the communications tax bill means is that telecoms operators will pay as much as nine per cent for all telecommunications services rendered to subscribers and we are kicking against it because it will impact negatively on the telecoms industry in several ways. Before now, there were deductions on all phone calls made by subscribers by about 2 per cent. Again, the cybercrime act that was signed into law last year by former President Jonathan Goodluck also stipulates that 0.25 per cent tax must be paid by the operators. We still have the value added tax (VAT) that telecoms operators also pay such tax. By the time the planned Communications Tax Bill is passed, it will become a huge burden for telecoms operators to pay and at the end of the day, the telecoms subscribers bear the brunt, because all the taxes will be shifted to the subscribers, through increase in tariff, and we are saying no to the bill.

What is NATCOMS doing to sensitise its members and the general public concerning the bill?

We are doing a lot to address the issue and to also sensitise our members who are the telecoms subscribers in the country. When we first heard of the bill, we approached telecoms operators, and asked them if they were likely going to increase tariff, should the bill be passed and implemented, and they all answered in he affirmative. So we quickly told them we would fight against it. So what NATCOMS has done do far is to get the consent of all telecoms bodies in the country, including the international telecoms body called the GSMA, to collectively sign a letter, which we had since presented to the Minister of Finance, and the Minister of Communications and we sent copies of the letter to the Speaker, House of Representatives, the Senate President, the Chairman of the House Committee on Communications, Chairman, House Committee on Finance. The letters were sent on April 30, 2016. After that I went on air in some radio and television stations to sensitise Nigerians on the danger that the bill will cause for telecoms subscribers, if passed into law. The print media has also been supportive by publishing our stories on this issue. We have also gone online to open a link known as ‘Change.Org’ and we are calling on all Nigerians to connect to the link and append their signatures on the petition, which is directed to the ministry of communications and the National Assembly, in support of our common cause.

Last month, NCC planned to auction the 2.6GHz spectrum, but at the end of the day, only one operator indicated interest to participate in the auction exercise, even when the other operators needed the spectrum. What is your view on this?

In my view, the refusal of telecoms operators to participate in the planned 2.6GHz spectrum, even when they needed the spectrum to drive broadband penetration in the country, was partly as a result of the ripple effect of the MTN N1.04 trillion fine. Operators are scared to invest in a county where the regulatory policy is harsh on operators. Operators are not certain of their investments because the regulatory environment is harsh and this also could be the reason why foreign investors are scared to come to Nigeria to invest their money. I want to advise that the regulator should carry out its independent findings on the actual cause of the refusal of operators to show interest in the 2.6GHz spectrum sale and the regulator will be baffled at its findings.

Nigeria is preparing for another digital switchover by June 2017, having failed twice in the process in the past. With the current level of preparation, do see Nigeria getting it right by June 2017?

Nigeria can achieve this feat of moving from analogue broadcasting to digital broadcasting, otherwise known as digital switchover, only by commitment and hardworking. If our neighbouring country like Ghana could achieve it, I see no reason why Nigeria cannot get it right, come next year. I want to believe that with the present government, we will definitely achieve it. Nigeria is the most populous nation on the African continent and we should lead for others to follow.

Nigeria has projected 30 per cent broadband penetration by 2018, above its current level of 10 per cent penetration. Do you see the country achieving this feat within the next few months?

What government needs do is to first put the right infrastructure in place to assist broadband penetration. We need more base transceiver stations, otherwise known as base stations. The 16,000 base stations currently controlled by IHS for all telecoms operators in the country where we have over 170 million subscriptions, is not enough to achieve ubiquitous broadband penetration for the country. Britain for instance, has over 20,000 base stations and they are building more. Again, we need a national backbone infrastructure that will transmit the huge capacities of broadband that are not utilised at the shores of the country. These capacities, running into several terabytes of broadband from the submarine cables, berthed by MainOne, Glo 1, MTN WACS, among others, are underutilised. In fact sources had it that Nigeria is utilising less than 10 per cent of the total capacities of the broadband cables currently seated at the shores of the country, yet there is insufficient supply of broadband in cities and hinterlands, leading the high cost of bandwidth and internet service in the country. So we need national backbone infrastructure that will transmit the broadband capacities from the shores of the country to the hinterlands where they are most needed.

Nigerian telecoms operators depend so much on service delivery, through mobile, which is the Global System for Mobile communication (GSM), at the detriment of fixed line service, which is cheaper for subscribers. How do you want to address this imbalance?

This issue of neglect of fixed line service, otherwise known as landline service, started long ago and I blame the former Executive Vice Chairman of the Nigerian Communications Commission (NCC), Ernest Ndukwe for the issue. In 2006, he introduced the interconnect rates for fixed lines and mobile lines, in the telecoms sector, and made the rates almost equal. In other countries of the world, interconnect rates between fixed lines and mobile lines are never equal or close to equal and this is the reason why the cost of fixed line services are always cheaper than the mobile line services everywhere in the world. So that singular act of Ndukwe, contributed in the stifling of fixed line operations in the country. Fixed line services, as I speak, are dying because the operators prefer to offer mobile GSM services which results to quicker returns on investment for the operators at the detriment of fixed line that is supposed to be cheaper for telecoms consumers.

Recently, the performance of ministers in Buhari’s government, were assessed in the last six months and the Minister of Communications was rated low. What could be responsible for this?

I read the assessment in the papers and our minister, which is the minister of communications, Adebayo Shittu, was rated low, but he was not the only one rated low. All others were rated low except for about two ministers who were rated high. Now the reason why the Minister of Communications was rated low could be attributed to the poor telecoms infrastructure level in the country. Again, the challenges of the MTN fine which the minister met on ground on assumption of office, diverted his time and energy to a large extent, in trying to address the issue alongside with the NCC and the federal government. Now that he has been able to resolve the issue of the fine by heavily reducing it to an applicable amount that MTN could pay conveniently in three years, I am very sure that in the next six months, Nigerians will see a remarkable improvement in the telecoms sector.

Subscribers are complaining of the recent position of operators not to roll-rollover data subscriptions after validity period. How has this been addressed?

Yes there have been complaints from telecoms subscribers over the refusal of telecoms operators who offer data services, to rollover the balance of data subscription to the next month for usage by the subscriber. What most operators do is to cut off whatever amount of data that is left after the validity period of the data subscription, instead of rolling it over for the subscriber since the subscriber did not exhaust the data in the previous month. For example if a subscriber had two gigabyte of data bundle unused before the end of the one month validity period, the operator will wipe it out completely when the subscriber is paying for another one month subscription, instated of rolling it over for the subscriber. We have complained about this, and I am happy about the minister’s recent intervention, when he said henceforth, all data that were not completely used by the subscriber, should be rolled over to the next month subscription and allow the user to have accumulated data on his/her subscription, which could be used by the subscriber anytime the subscriber wishes to do so.
I also feel that the NCC should monitor some of the excesses of the operators and bring them to book.

The issue of unsolicited text messages has been lingering for too long, and operators still broadcast the text messages and force them down the throats of subscribers, even when they do not need them. What is NATCOMS doing to save this act of deliberately embarrassing the subscribers with unsolicited text messages?

We have complained severally about unsolicited text messages and the operators kept pushing them because they deduct money from the subscribers for each message pushed to the their mobile devices. But we are happy that NCC has come up with a definite statement that by July 1, 2016, unsolicited text messages must stop and there are fines awaiting any operator or licensed Value Added Service (VAS) operator, who may still want to bombard subscribers with unsolicited text messages.

As a leader of telecoms subscribers in Nigeria, what is your assessment of service quality in the telecoms industry?

Honestly, telecoms service offering is still poor at present, though there is a remarkable improvement from what it used to be in the past. When the operators started in 2001, telecoms service delivery was superb and the reason then was that the number of telecoms subscriptions were still low, and within one to two million subscriptions. But as the subscriber base grew to tens and hundreds of millions, the network started getting congested and service offerings became poor. At that time, NCC made it mandatory for operators to pay each subscriber, the sum of N175, through airtime, as compensation for poor service quality, but Globacom was exempted then, because its service was still good at that time, which was around 2007. Although there is improvement in poor service quality but it is not yet perfect. We want a standing order from NCC to compel operators to pay soft fine for poor telecoms service, and the fine must be paid directly to subscribers who suffer the brunt of poor service quality, rather than asking the operators to pay the money to government account. If operators pay each subscriber as much as N10,000 via airtime as fine for poor service quality, then subscribers will be well compensated and the operators will sit-up.

In 2003, your association took a stand to boycott telecoms calls for one day, in protest of high cost of telecoms services, and you succeeded. Now that you are kicking against the proposed telecoms tax bill, will you take such decision again, should the National Assembly go ahead to pass the bill?

Yes, on Friday September 19, 2003, NATCOMS ordered all its members who were telecoms subscribers to switch off their mobile phones for one day and boycott making calls on that day. We did that to press home our demand for a reduction in the cost of telecoms services, and the action was successful. On the issue of the proposed telecoms tax bill, we are applying various measures to ensure that we stop them from passing it into law. For instance all the various industry associations in the country have entered into agreement and we have all signed that the bill should not be passed because it will be detrimental to telecoms growth in the county and it will also force telecoms subscribers to pay more for telecoms services rendered by the operators. We have since sent copies of our agreement to the Ministry of Communications and the National Assembly and we followed it up with visits, but if they ignore our pleas and still go ahead to pass the bill into law, then we will go to court to challenge their action.