MTN: Can the Next Twenty Years be Better?

MTN: Can the Next Twenty Years be Better?

Raheem Akingbolu reviews the 20 years of MTN operation in Nigeria, challenges and lessons

The coming of global system for mobile telecommunications, GSM, into Nigeria in 2001 changed the dynamics of telecommunications in the country. But it also goes beyond that. By the time the derivate of that ‘revolution’ started rolling in some five years later via instant messaging by service providers like Blackberry, then the impact of that singular move hit home; albeit in a pleasant manner.

At the centre of the Nigerian telecommunications revolution via the GSM was the South African company, MTN, who alongside the then Econet (now Airtel), won the bid for the GSM licences carried out earlier that year. A Nigerian company, Communications Investment Company, CIL, owned by billionaire businessman, Mike Adenuga, could not make the cut due to issues raised by its France-based financier, BNP Paribas, who wanted an indemnity over frequency given to CIL which was subject of litigation by the Stallion Group that had earlier won the bid carried out by the previous military regime but which was cancelled by the new civilian government. After the expiration of the 48 hours, which was the moratorium given to those who won the bids to pay the $280 million licence fee, the frequency awarded to CIL was withdrawn. And that began the battle that culminated in the naming of the second national carrier in Glo, also promoted by Adenuga, which ironically became the third GSM service provider after MTN and Econet.

The Roll Out

MTN rolled out in August 2001. According to sources close to the company, the target at the time was to hit 100,000 subscribers within the first one month but this was surpassed within one week. The pioneer managing director of the company, Lazarus Zim, was said to have been impressed by the quick progress the company made during the first three months of operation and backed with massive investment funds, the company was able to roll out in Abuja and other major cities then. And it was not surprising when the company adopted the slogan, “Your Best Connection” which it later changed to “Your Better Connection” after it was reminded that there could not be best between two competitors.

One of the things that worked in favour of MTN was the boardroom fracas that engulfed its major competitor, Econet, shortly after they launched operations. Owned by Zimbabwean businessman, Strive Misiyiwa, the company, after paying the mandatory $280m, did not have funds for expansion and growth. It approached some state governments like Akwa Ibom and Delta who made massive investments in the business. However, boardroom politics ensured that Misiyiwa had to abandon ship and return to its homeland. Two years later, the company changed to Vodafone and later V-mobile and then Celtel before the latest name, Airtel, after which it stabilised and was able to play its roll as credible brand challenger to MTN.

The massive and quick expansion of MTN into the interior established it as a major and indisputable number one GSM service provider in the country and has remained so till today. Its strength is nit just in the reach of its service, but the fact that it also the provider of the nation’s data backbone which has further reinforced its position as the power behind Nigeria’s effective telecommunication services.

MTN started with the N1500 recharge card and later the N700 value before introducing the N400 value. It also introduced the monthly N4000 Booster card, which would half the cost of calls made on the network. It also introduced the Business Package, which was prepaid.

Despite these initial innovations, the company pointedly told its subscribers’ that per second billing was not possible. This was a massive challenge for its early subscribers who were being charged N50 per one minute of call.

Billing Controversy

The greater challenge, however, was that if you made call of one minute and two seconds, you would be charged N100.

The company’s Public Relations Officer at the time, Calixthus Okoruwa, had told THISDAY that the company was not ripping off Nigerians but that per second billing was no just possible shortly after roll-out of GSM services in any country.

“It usually takes about five years before you can switch to per second billing. This is not a Nigerian thing but what is obtainable worldwide. You also have to put the technology for this in place. So Nigerians have to bear with us, ”Okoruwa explained in an interview.

For the first one and a half years of GSM operations in Nigeria, it seemed per second billing was a mirage until Glo rolled out in 2003. Inside sources told THISDAY that Glo did not want to start with per second billing as the promoter, Adenuga, believed he had to start also with per minute billing to recoup investment and be at par with the existing service providers, MTN and Econet.

He was, however, persuaded that the only innovation he could bring into a market already dominated by MTN and Econet was to roll out with per second billing. This was a game changer. Withing weeks of Glo rolling with per second billing, MTN and Econet followed suit. And so the competition started in full force but in terms of service and reach, MTN remained ahead of the chasing pack.

In establishing its brand value and ensure constant connection with its patrons and subscribers, MTN chose its communication strategy by identifying with those events that the culturally connected with the people. MTN decided to partner with the organisers of events like the Ofala Festival in Onitsha, Argungun Fishing Festival in Sokoto as well as the Osun Oshogbo Festival in Oshogbo, Osun State. These festivals provided the brand with the opportunity to show that it was not just a foreign business concern making money in Nigeria, but a brand that had come to stay and establish itself as a protector of the people’s cultural identities. This move massively helped the brand’s value and enhanced its perception amongst its patrons. Beyond this, the brand also identified with the National Youth Service Corps (NYSC), by registering its presence in virtually all Orientation Camps in the country. It was another way of showing that it was ready to be part of building the nation’s future.

Success As Burden

For MTN, success also become a burden. And like every big brand, there is always the tendency to get carried away and dare the authorities and test their resolve. The first major brush MTN had with the authorities was when it was accused of not deleting over five million lines, which were not registered and were still being used by subscribers. Earlier one, the federal government had decreed that every GSM user in the country, irrespective of service provider, must register their lines on or before a stipulated time frame after which the lines so unregistered would be deleted.

However, it was discovered by Nigerian Communications Commission (NCC), via the compliance audit carried out by the Commission, that MTN had about 5.2million Subscribers Identification Modules, SIM, simply known as lines, it had refused to disconnect or deactivated. Invoking Section 20, subsection One of Telephone Subscribers Regulation, TSR, Law on MTN, the NCC fined the GSM service provider a sum of $1000 for each of the 5.2 million lines that were not deactivated by the service provider amounting to $5.2billion. This was in October 2015.

On November 2, 2015, the MTN wrote a letter to the NCC admitting wrongdoing on its part but asking for reduction in its fine and more time to be able to pay the fine. The NCC said the decision on the fine was final but that the two parties could meet to see how the deadline payment of the fine could be reviewed and structured. On 16th November of the same year, the NCC assured the public that the payment of the penalty would not be enforced until the two parties had come into an agreement.

It was a major public relations crisis for the company and head had to roll. The chief executive officer of the company, Sifiso Dabengwa, had to resign. He was not the only one. The Head of the Nigerians Operations, Michael Ikpoki, too had to go. Head of Corporate Affairs, Akinwale Goodluck, too had to resign.

The Casualties

In resigning, Dabengwa had this to say: “Due to the most unfortunate prevailing circumstances occurring at MTN Nigeria, I, in the interest of the company and its shareholders, have tendered my resignation with immediate effect.”

What followed were diplomatic efforts by the South African government and its Nigerian counterpart to give MTN a safe landing and mitigate the effect of such a humongous amount of fine could have on its finances. At the end of the day, a compromise was reached and MTN had to pay $3.2billion dollars instead of the initial $5.2billion.

Irrespective of how it has operated in the last 20 years or the challenges it has faced, MTN has paid its dues in Nigeria. In terms of innovations, it changed the way Nigerians were communicating. Beyond that, it extended its services to towns and villages where telecommunications probably would never have reached. Till today, there are communities that only have MTN as their GSM service provider. Beyond this, the MTN Foundation has been touching lives in a positive manner since its inception.

In terms of brand communication, MTN has produced iconic brands, which not only communicated its brand value but also tried to emotionally connect with its subscribers and patrons. The ‘Mama na Boy’ television commercial remains evergreen till today.

The first 20 years have come and gone with its own story of ups and downs. The next 20 years can only be better.

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