Nigeria Cuts MTN Fine to $1.7bn

330 billion Nigerian Naira is a lot of money; it is nearly USD1.7bn at official exchange rates. But it is a lot less than the USD5.2bn fine that MTN was originally threatened with after they failed to disconnect millions of unregistered SIMs in Nigeria.

Probably both parties haggled for a ‘sensible’ compromise which ensured the Nigerian government received a lot of money (and increased respect) whilst the South African telecoms group saved themselves from worse economic torture and the continued wrath of their shareholders. MTN’s share price was up 18 percent as a result of this relative good news, though it remains 27 percent down on where it was when the Nigerian government first announced it would fine MTN.

MTN Executive Chairman Phuthuma Nhleko trumpeted the deal:

Further to the various announcements to shareholders regarding this matter, MTN is pleased to inform shareholders that the matter has been resolved with the Federal Government of Nigeria (FGN)…

I wish to express thanks and gratitude to the FGN for the spirit in which the matter was resolved and I believe that this is the best outcome for the Company, its stakeholders, the FGN and the Nigerian people and that the relationship between MTN, the FGN and the NCC [Nigerian Communications Commission, their comms regulator] has been restored and strengthened.

Accordingly, shareholders are advised that they are no longer required to exercise caution when dealing in the Company’s securities.

Telcos mess with governments at their peril, though even the Nigerian government realizes that destroying a large overseas business, and a major communications provider, would probably not be the best strategic outcome for their economy. It is my belief both sides failed to communicate effectively in the run up to the initial fine. The Nigerian government has been heard, but maybe they would have done better if they threatened to fine MTN in managed segments, per each batch of SIMs that should have been disconnected. This would have managed the impact on MTN’s business whilst obtaining a similar end result.

Many people talk about managing telco risks, and one of the best ways to manage risk is by talking – to governments, to customers, to the stock market, to employees and others. I think it is likely that MTN will be keen to maintain a continuous dialogue with governments in future.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.