Nigerian Communications Commission (NCC) has suspended all regulatory services to MTN Nigeria until it pays the staggering N1.04 trillion ($5.2bn) fine for flouting its directive to deactivate 5.2 million incompletely registered subscriber identification module (SIM) cards on its network.
Consequently, the share price of MTN Group fell 12 percent Monday on Johannesburg exchange.
NCC fined MTN Nigeria N1.04 trillion ($5.2bn) for not deactivating incomplete SIM cards on its network as the regulator directed last July.
Reports said the largest mobile operator in Nigeria with headquarters in South Africa is in for more trouble for 28 other accumulated breaches, some of them dating as far back as 2012.
According to an NCC document which catalogued MTN’s numerous infractions, the regulator decided to wield the big stick to beat MTN into line.
“In the NCC quarterly compliance enforcement report for Q2 2015, out of the six sanctions imposed on operators for various acts on non-compliance, MTN was involved and sanctioned for four separate infractions,” the NCC document said.
“As it stands today, MTN’s persistent violations have forced NCC to impose the unprecedented sanction of suspending all regulatory services to MTN following its accumulation of over 28 separate and proven infractions.”
NCC also said MTN’s dominance places limitations on the federal government’s power.
MTN currently has 59.3 million active subscribers, the largest fibre-optic and microwave backbones and the largest data centre in sub-Saharan Africa and uses over 9,000 mobile towers for its operations.
“MTN’s dominant position in the mobile telecommunications market is so strong that the other telecommunications operators in combination cannot provide sufficient capacity to cover for MTN’s traffic if for security or other reasons the government needed to impose ultimate sanctions. This situation may further embolden MTN to not comply with the law in a timely fashion,” the regulator said.
On Thursday, October 22, 2015, NCC reviewed the registration records of all the telecom operators, took into consideration their compliance records, and imposed a fine on MTN alone for noncompliance with SIM registration.
“The fine of N1,040 billion is in line with Section 19 of the SIM Registration Regulations specifying N200,000 per unregistered SIM and the penalty has been applied for the 5.2million MTN SIM card registration records found to be non-compliant by NCC.
“This unprecedented fine is indicative of the magnitude of the transgression and the seriousness with which NCC and the authorities are approaching this issue. It is also more likely to ensure that the willful non-compliance by MTN ceases,” NCC said in the document.
MTN’s infractions, according to NCC, show that the operator failed to comply with the directive of the NCC and security agencies to deactivate improperly registered subscribers within the seven-day deadline ending on August 11, 2015.
Following repeated warnings and compliance enforcement visits, MTN only made a partial attempt to bar unregistered subscribers in selected areas over a few days in September 2015.
“Other operators had fully complied and reconciled their deactivations with the invalid registrations shared by the NCC up to four weeks earlier. The consequence of MTN’s refusal to comply with the directive is even more pronounced as about half of all the invalid registrations shared by the NCC belonged to MTN.
“These SIM cards with invalid registrations pose a grave security risk to the country as their registration information cannot be used to successfully identify their owners in the event of a security issue involving any of these SIM cards. The recent kidnapping of the former finance minister, Chief Olu Falae, is one example of this risk: the kidnappers used MTN SIM cards and MTN was unable to provide any registration data for those SIMs,” NCC explained.
NCC said, “MTN’s non-compliance with the deactivation directive is unfortunately not an isolated incident. It needs to be seen in the context of a general pattern of non-compliance with regulatory directives that actually predates the current SIM registration infractions.”
MTN’s catalogue of regulatory infractions
Other infractions committed include non-compliance of MTN with the restriction on promotions imposed on mobile operators on November 8, 2012, in an effort to address persistent Quality of Service issues within the industry; failing to comply with NCC’s Determination of Dominance 2013; and violation of pricing obligations under the 2013 Dominance Determination for MTN Virtual Top Up plus.
In May 2014, NCC issued a ‘final warning’ to MTN to comply with its pricing obligations under the 2013 Dominance Determination or face penalties.
On October 2014, NCC imposed sanctions on MTN for violating its pricing obligations under the 2013 Dominance Determination through its ipulse offer. And on August 8, 2015, MTN failed to comply with NCC directive to all operators to stop the automatic migration of data bundle subscribers to Pay As You Go (PAYG) browsing upon depletion of their data bundles, which other operators complied with.
On July 8, 2015, NCC directed operators to deactivate all pre-registered SIM cards (SIMs registered but without a record of activity) within a period of 21 days – from July 8, 2015 to July 29, 2015.
On August 4, 2015, operators, representatives of the Office of the National Security Adviser (ONSA), Department of State Services and NCC held a meeting to discuss issues concerning SIM registration in Nigeria.
The issue of invalid registrations was highlighted as a major threat to national security and a directive was issued to all telecommuni- cations operators to deactivate all SIM cards with improper/invalid registration details by August 11, 2015. On August 17, 2015, NCC and security agencies conducted a compliance audit on all operators between August 17, 2015 and August 19, 2015 following the expiry of the August 11, 2015 deadline for deactivation of improperly registered SIM cards.
NCC disclosed at a press conference on August 17, 2015, that despite sharing a list of invalid registration details with operators, MTN made little or no effort towards compliance with the deactivation directive whereas other operators largely complied.
It noted that on September 4, 2015, a high level meeting chaired by the chief of staff to President Muhammadu Buhari was called at the Presidential Villa, Aso Rock, Abuja.
This meeting is unprecedented in the Nigerian business industry as the telecom CEOs were brought to meet the heads of the main security agencies – ONSA, DSS, Directorate of Military Intelligence (DMI) and NCC – in order for the compliance with the deactivation directive to be emphasized.
Operators were advised that continued noncompliance would lead to the imposition of penalties of N200,000 per improperly registered SIM card in line with S.19 and S.20 of the SIM Registration Regulations 2011, and that all businesses must respect the law or risk licences being revoked.
According to the NCC document, the chief of staff implored operators to take the matter seriously, noting that (i) security and safety of the people is No. 1 on the President’s agenda; (ii) 70 per cent of kidnappings, violent crimes and insurgence are facilitated using unregistered SIM cards, making it impossible to trace the perpetrators; (iii) government supports the private sector but companies must operate within the law; (iv) in other countries, heavy fines are levied on the private sector for noncompliance (e.g. JP Morgan’s $20bn fine).
It was also agreed that (i) operators were to immediately reconcile the records of their deactivations against the list of invalid registrations earlier shared with operators by the NCC by September 7, 2015; and (ii) a penalty of N200,000 per unregistered/poorly registered SIM would be imposed as stipulated in the SIM Registration Regulations 2011.
MTN lobbies NCC, share price falls 12%
MTN Group has started to face the brunt of the fine of N1.04 trillion ($5.2bn) imposed on MTN Nigeria as its share price fell by 12 percent on the Johannesburg Stock Exchange (JSE) Monday.
The operator has, however, begun lobbying NCC to resolve the landmark infringement.
MTN shares decline of 12 percent was the worst since December 2008, and traded 9.4 percent lower at 172.94 rand as of 2:36 pm in Johannesburg. That values the company at 320 billion rand ($24 billion).
The fine relates to the timing of the disconnection of 5.1 million MTN Nigeria subscribers in August and September 2015 and is based on a fine of N200,000 ($1,008) for each unregistered subscriber. MTN Group issued an advisory Monday to its shareholders about the N1.04 trillion fine imposed on MTN Nigeria.
A statement from MTN’s Fairland headquarters, South Africa, to the JSE shareholders reads: “Shareholders are advised that NCC has imposed a fine equivalent to $5.2 billion on MTN Nigeria. This fine relates to the timing of the disconnection of 5.1 million MTN Nigeria subscribers who were disconnected in August and September 2015 and is based on a fine of N200,000 for each unregistered subscriber.
“MTN Nigeria is currently in discussions with NCC to resolve the matter in recognition of the circumstances that prevailed with regard to these subscribers. We will continue to update shareholders in this regard.”
Also, MTN Nigeria corporate services executive, Mr. Akinwale Goodluck, said: “MTN has confirmed that NCC has imposed a N1.4 trillion fine ($5.2bn) on MTN Nigeria. This fine relates to the timing of the disconnection of 5.1 million MTN subscribers that were disconnected in August and September 2015 and is based on N200,000 fine for each improperly registered subscriber. MTN Nigeria is currently engaging with the NCC to resolve the matter.”
NCC confirms imposing N1.04trn fine on MTN
NCC’s Director of Public Affairs, Mr. Tony Ojobo, when contacted said: “Of course, I can confirm to you that there was a fine of $5 billion (equivalent to N1.04 trillion) imposed on MTN for non-deactivation of over 5.1 million unregistered SIM cards. We are going to release a statement.”
The fine is the largest in the history of telecom infringements and may redefine the relationship between telecommunications operators and the regulator. The fine was for undermining efforts by the Nigerian government to tackle security challenges and the war against terror and allied crimes.
Last Thursday, MTN Group had announced that its Nigerian operation lost 5.1 million subscriber lines in the month of August to the deactivation of incomplete SIM registrations ordered by NCC. This has led to MTN cutting its full-year forecast for subscriber numbers.
–Leadership