The N1.04 trillion fine imposed on MTN by the Nigerian Communications Commission (NCC) on October 22 is still shaking the corporate world by its staggering size.
The predictable diplomatic shuttles have begun between Pretoria and Abuja. Latest reports said the corporate giant is pleading for reduction.
We concede that MTN’s admission of guilt will save time and money in costly litigations. If it admits culpability, it should be a mitigating factor in assessing the penalty.
However, it makes no sense to us that a deliberate and wilful violation of NCC’s directive merits the reduction in fine imposed on the mobile telecoms giant. Especially when it obviously chooses to protect its market share at the expense of national security.
Last Thursday, BP agreed to pay $18.7 billion to settle all federal and state claims arising from the Deepwater Horizon crude oil spill into the Gulf of Mexico in 2010, including the biggest pollution penalty in the history of the United States. It has not folded up.
That is nearly four times the $5.2 billion imposed on MTN.
The NCC has every reason not to reduce the fine by one kobo because MTN knew the consequencies when it chose to willfully ignore the request to deactivate 5.1 million unregistered or poorly registered SIM cards on its network.
The genesis of the fine dates back to last August 4 when, all the major mobile telecoms companies and the NCC met with security agencies at the Villa in Abuja with the representative of the office of national security adviser (NSA).
The sole agenda of the meeting was the realisation that attempts to trace criminals with phone lines in investigations were frustrated by the fact that SIM registration was either not done at all or badly registered.
For a country facing insecurity problems such as Boko Haram insurgency, ethnic and religious militancy, mass murders, rapes and maimings, among others, the use of unregistered SIM cards to demand ransom payments means the animals will simply vanish without trace.
The sequence of events highlighting the wilful violation by MTN was clear.
On July 8, 2015, the NCC directed operators to deactivate all idle pre-registered SIM cards without a record of activity within 21 days: Deadline July 29, 2015.
On August 4, 2015, the operators, representatives of the NSA, Department of State Services (DSS) and the NCC met to discuss the SIM registration and crime in Nigeria.
Invalid registration was highlighted as a major threat to national security. The NCC issued the directive to all the operators to deactivate all SIM cards with improper/invalid registration details. Deadline August 11, 2015.
A week after the deadline, the NCC and the security agencies conducted a compliance audit for two days on all operators from August 17, 2015.
The NCC addressed a press conference on August 17, 2015, warning that MTN made little or no effort to comply with the directive whereas other operators largely did.
On September 4, 2015, a meeting chaired by the Chief of Staff to the President was held at the Villa.
All the telecom CEOs were brought to meet the heads of the main security agencies – NSA, DSS, Directorate of Military Intelligence (DMI) along with the NCC – and compliance with the deactivation directive was emphasised.
So also was the penalty for non-compliance well known to the operators: N200,000 per improperly registered SIM card in line with Sections 19 and 20 of the SIM Registration Regulations 2011.
The Chief of Staff gave four reasons for the seriousness of the directive: (i) security and safety of the people is Number 1 on the President’s agenda; (ii) 70 per cent of kidnappings, violent crimes and insurgency 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.
A new deadline of September 7 was set for compliance or sanctions.
The NCC said every other network operator complied with the agreement reached, including the only active voice CDMA operator, Visafone.
Etisalat has 23.5 million subscribers. Airtel has 31.1 million; Globacom also has 31.3 million subscribers as of last month. MTN, the behemoth, has 62.5 million for a total 148.4 million.
Only MTN did not comply. From the August meeting through September, it was unable to deactivate its 5.1 million unregistered subscribers.
The last straw was the September 21, 2015 kidnap of former Secretary to the Government of the Federation, Olu Falae. The kidnappers used MTN lines to demand ransom and it could not provide information demanded by investigators.
The NCC descended with its hammer on October 22 with the unprecedented N1.04 trillion fine.
We agree with Senator Ben Bruce about the huge fine. But we disagree with his assessment that it would drive away foreign direct investment. Such happens when lawless fines are arbitrarily imposed by government agencies.
Others claim that it was imposed because Nigeria is broke because of the fall in crude oil price. Broke or not, the extra income is good for the treasury.
J.P.Morgan’s $20 billion fine in January last year for non-compliance with banking regulations in the United States aided the U.S. treasury.
Every investor should be put on notice that the lawlessness of the past is over.
We commend the acting NCC Executive Vice Chairman, Umar Dambatta, and commissioners for setting the pace in proving that regulators in Nigeria can make the systems, processes and laws work efficiently and transparently.
National Agency for Food and drug Administration and Control (NAFDAC), the Customs, Immigration, and other agencies must take note.
MTN and other corporate giants must also take note. In some countries, Russia and China, for example, this blatant display of impunity would have resulted in outright revocation of licence.