MTN raises expenditure in Nigeria to $1bn

By ADEDEJI ADEYEMI FAKOREDE

MTN group has raised Nigeria’s capital expenditure (Capex) target for 2016 to about $1 billion from $700 million, despite the outstanding $3.4 billion fine issued on the telecom giant by the Nigerian Communications Commission (NCC).

The increased capex spending by MTN may be used to improve its network-service quality and rolling out a 4G offering.

MTN Nigeria had initially withdrawn its court case challenging the NCC’s authority to issue such a huge amount of fine and made a N50 billion payment in February 2016 to meet the government’s condition for out of court settlement.

Currently negotiations between MTN Nigeria and the Federal Government are ongoing and this move by MTN to increase its capital expenditure in the country despite the outstanding amount to be paid as fine, suggests that the ongoing negotiations may yield positive fruit industry analysts said.

CEO MTN Nigeria, Ferdi Moolman said that the company is positioned for growth and investing in different things, especially broadband services. MTN Nigeria recently acquired Visafone, the last surviving code division multiple access (CDMA) in Nigeria.

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“We have started looking at 4G and Visafone had frequency which allows us to do this extension, so if we want to start rolling out 4G and we want to take better services to the public we had to acquire a platform that will enable us do this,” Moolman said.

The NCC had initially issued MTN a fine of N1.04 trillion ($5.2), relating to the timing of disconnection of the 5.1 million active MTN subscribers with improperly registered SIM cards calculated at N200, 000 for each subscriber.

Monday, 16, November 2015, was set as the deadline for payment of the fine. However, MTN pleaded for leniency and the deadline date was extended until negotiations had been concluded.

On December 4, 2015, MTN Group corporate affairs issued a release stating that although the NCC had initially sent MTN a letter that it had taken the decision to reduce the fine imposed on the MTN Nigerian business from the original N1,040,000,000,000 (One trillion, forty billion Naira) to 674 billion Naira, a reduction of 35% of the original fine which had to be paid by December, 31, 2015, a second letter which was stated to supersede the first letter was sent which informed the Company that the fine had actually been reduced by 25% to 780 billion Naira and not by 35% to 674 billion Naira, as was stated in the first Letter. The payment date remained the same.

MTN met the Federal government’s condition to pay a substantial amount of the fine before commencing out of court settlement by paying N50 billion and the announcement of increased CAPEX for this year shows that negotiations are yielding positive results and not stopping the growth of MTN in Nigeria.