Nigeria soft-pedals on MTN’s N708bn fine

…may wait for outcome of hearing in February

By ODUNEWU SEGUN

NIGERIA may have decided to soft pedal on the payment of the controversial $3.9 billion imposed on MTN Nigeria by Nigerian Communications Commission (NCC) as National Daily learnt that the commission is said to be waiting for the determination of the case instituted by MTN billed for next month.
The new development, some analysts say, is not as a result of the commission’s respect for the rule of law per se, but that government has a lot of issues confronting the largest economy on the continent.
Consequently, sources close to the presidency said, with the dwindling fortunes of the economy typified by low oil price and the weak naira, Nigeria’s insistence on the payment will further damage the credibility of government who is desperately looking for foreign direct investments to revitalize her near comatose economy.
NCC had before now insisted that the telecom giant must pay the $3.9 billion (N708billion) fine notwithstanding the suit instituted by MTN at a Federal High Court in Abuja.
With the expiration of the December 31st, 2015, the battle line has been drawn between the Federal Government who has since employed a 5-man team of Senior Advocates to defend the sanction in court; the fate of MTN Nigeria hangs in the balance.
But some credible sources told National Daily at the weekend that both parties are ready to come down from their Olympian heights for a possible round table discussion with the hope of an amicable settlement
But MTN has stated categorically that it would not pay the fine since the case is already in court. The Company made this known in a released to the public at about 8pm on New Year’s Eve, hours away from the deadline issued by the NCC for the payment of the fine.
Mr. Funso Aina, public relations and protocol manager at MTN Nigeria, stated that when a case was in court, there is a limit to comments that could be made on the matter, in his response to a media enquiry.
“Suffice it to say that based on the lis pendens rule (pending legal action), all parties are enjoined to restrain from taking further action until the matter is finally determined. This is consistent with previous judicial decisions in Nigeria, ”Aina said.
The telecom company claimed that the NCC violated its fundamental right to fair hearing, adding that by imposing the fine, the NCC was already flouting the exclusive legislative powers of the National Assembly, as well as the judicial powers of the courts established under the Constitution.
However, the NCC, through its lawyers, Ahmed Raji (SAN) and Mahmud Magaji (SAN), asked the court to dismiss the suit for want of jurisdiction or transfer the case to Abuja instead as the two respondents in the MTN suit the NCC and the Attorney General of the Federation were both based in Abuja.
According to NCC’s Director, Public Affairs, Tony Ojobo, NCC is already consulting with lawyers on the next line of action since the deadline has lapsed with MTN failing to meet up.
He said the fine did not come from out of the blues, saying the NCC explored the Registration of Telephone Subscribers Regulation, 2011, which MTN also must have seen and owned a copy.
He said on November 7, 2011, a 12-page regulation was published in the Federal Government of Nigeria Official Gazette No 101 Vol, and was signed by the former Executive Vice Chairman of NCC, Dr. Eugene Juwah, provided the framework for the registration of subscribers of mobile phone users in Nigeria.
According to him, pages 11 and 12 of the NCC Registration of Telephone Subscribers Regulations set out penalties for default in sections 19 and 20.
Section 20 (1) of the Regulation states that: “any licensee who activates or fails to deactivate a subscription medium in violation of any provision of these Regulations is liable to a penalty of N200, 000 for each unregistered but activated subscription medium.”
Section 20 (2) states further: “where the commission is satisfied that a body corporate is culpable, the Director, Chief Executive Officer, Manager or Secretary shall also be liable to pay fine of N200, 000 unless, having regard to the nature of his functions in that capacity and to all the surrounding circumstances, he proves that, (1) the offence was committed without his knowledge, consent or connivance; and (11) he took all reasonable precautions and exercised due diligence to prevent the commission of the breach.
“Given how regulations are made in regulated sectors, it is inconceivable that MTN Nigeria was not aware of the regulation, the penalty for default, and the implication of default for its business,” Ojobo said, adding that operators in regulated environments have enormous legal and other resources to shape the outcome of regulations and analyses the risk to their operations.
However, experts argued that the initial fine of $5.2 billion was more than MTN’s total sales in Nigeria in 2014 and the equivalent of about 37 percent of the group’s total revenue, and may disrupt the operation of the company in Nigeria.
Commenting on the development, an industry analyst, Femi Fasanya, said, “If there is a lay off after the payment, will NCC, the Federal Government and the governors absolve and pay those that may be laid off?”
Also reacting, Taiwo Jacobs, another stakeholder believes that if MTN is asked to pay all the money, it may affect the capacity of Nigerian financial institutions especially as many of them are not healthy enough to withstand financial pressure any more owing to the current state of the economy.
But some other financial experts believe that MTN can conveniently pay the fine except that it would erode on its profitability for the year. Dr. Mustapha Ojo, a financial expert explained that contrary to the belief that Nigerian banks don’t have the financial muscle to pull the fine, “Only three banks can conveniently loan MTN from their minimum capital assuming it has not borrowed money to service other projects”
On the other hand, Dada Adetunji, a banker allayed fears that it won’t affect financial system liquidity but that more drop calls and poor service delivery may be experienced by subscribers.
He further explained that MTN is not an indigenous company that retains its profits in Nigeria. They take it back to South Africa. “The fine is an indirect way of retaining income made by MTN into the Nigeria’s tax web of a fine”.
However, he cautioned that MTN may not be able to declare much profit for the year and might need to sack workers to be able to remain in operation”.
President of Association of Licensed Operators of Nigeria (ALTON), Mr. Gbenga Adebayo said: “The truth is that foreign investors will not only be discouraged, Nigeria will find it difficult to convince any foreign investor it has the enabling environment. As if that was not enough, if all these companies collapse and many Nigerians are thrown back into the unemployment market, has NCC’s effort at regulation become a plus or minus?”
MTN, which has about 233 million customers in 22 countries in the Middle East and Africa, is Nigeria’s biggest telecom company with about 62 million customers.