* Nigeria extends operating licence
MTN faces tough questions in South African Parliament after it was handed a $5.2 billion fine in Nigeria for failing to comply with that country's telecoms regulations.
The chairwoman of the portfolio committee on telecoms, Nkhensani Kubayi, told Business Report Tuesday that they are setting up a date for MTN to appear before Parliament.
Parliament had a number of questions for the mobile company over its failure to comply with regulations in Nigeria, the committee chairwoman said.
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However, Kubayi would not comment on the fine, which is similar to the fine that could be imposed on any mobile operator for violating Rica regulations in South Africa.
She said it was in the purview of the telecoms regulator, the Independent Communications Authority of South Africa (Icasa). "I have to say that we have never had a case like this in South Africa before. It is the first time that this has happened with MTN in Nigeria," Kubayi added.
She said it would be in the interest of Parliament to get a first-hand account from MTN before getting to the merits of the case.
She said they would meet with the MTN bosses at the first available opportunity.
However, as MTN scrambles to contain the fallout, yesterday offered some relief after Nigeria's telecoms regulator extended MTN's operating licence, quelling investor fears that the company would have to pay the fine before the licence could be renewed.
MTN is in talks with Nigerian authorities about the fine that has been imposed on its unit in the west African country for failing to cut off more than 5 million users with unregistered SIM cards.
Nigeria has been pushing operators to verify the identity of their subscribers, on concerns that unregistered SIM cards were being used for criminal activity in a country facing an insurgency by Islamic militant group Boko Haram.
"We view this extension as a demonstration of confidence in MTN's capacity to continue to provide ground-breaking and innovative services to its customers," MTN corporate affairs executive Akinwale Goodluck said.
Leniency request
MTN had written to the presidency and the regulator asking for leniency and a review of the fine, a regulatory source said. "The letter is asking for a review of the fine downwards. They did not state how much review they want."
MTN, which earns 37 per cent of its revenue from Nigeria, would pay $92.2 million to renew its operating spectrum and extended the licence in its biggest market by revenue to 2021, the company said.
MTN, which has been criticised for notifying investors of sensitive information in a tardy fashion, said it had received notice of the licence renewal on Monday.
Chris Maroleng, an MTN spokesperson, said it had received the licence notification too late to issue a statement in this regard on Monday. He declined to say when MTN had received the licence notification, citing JSE restrictions.
Shares in MTN, down 25 per cent since the fine was announced last week, yesterday closed up 4.97 per cent at R155.54, which valued the company at R287bn.
"It's encouraging and pleasing to see MTN and the regulators are able to constructively engage on a commercial basis," said Anthony Sedgwick, a fund manager at Abax Investments.
The company's largest shareholder, Public Investment Corporation, said it was concerned about MTN's alleged non-compliance with Nigeria's telecoms regulations, as well as allegations its management did not immediately disclose material information about the fine to the market.
Some analysts have said the size of the fine risked damaging Nigeria's efforts to shake off its image as a risky frontier market for international investors, though others said it showed Nigerian regulators were keen to enforce the law.
If imposed, the fine would leave MTN with little money to spend on its network in Nigeria because it would wipe out more than two years of annual profits.
Paying the fine this month and the licence fee before the end of December could also prove to be a liquidity headache, as the company's cash was spread over more than 20 countries, Momentum SP Reid analyst Sibonginkosi Nyanga said. reputation among consumers can drop any lower because of this," Moerdyk said.
Last Monday MTN was slapped with a hefty $5.2 billion (R71.6bn) fine by Nigerian authorities for failing to disconnect about 5 million unregistered subscribers from its network.
Too much hassle
Moerdyk said, though, that despite the negative consumer sentiment towards MTN, it was unlikely there would be defections to competitors.
"I doubt a single MTN subscriber in South Africa will move to another network because it's too much of a hassle. South African consumers hold cellular networks in low regard," he said.
Joanita Roos, an ICT industry analyst at Frost & Sullivan, agreed, saying a decrease in the customer base seemed unlikely.
"Customers are typically more interested in price, quality and the type of services they have access to, as opposed to Bismarck Rewane, the chief executive of Lagos-based Financial Derivatives Company, said the fine was based on outdated average revenue per user (ARPU) of $50 a month, dating from 15 years ago.
"Now ARPU is around $8. The country cannot tolerate corporate arrogance, but this may also deter other investors because of the size of the fine," Rewane said.
*Source: Business Report, Johannesburg
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