Commentary: Will MTN learn from $15 billion Nigerian fine?

March 25, 2016 in Columnists, Editorial, Opinion by Editor

KAMPALA, MARCH 25- The news coming out of Nigeria is disheartening for all of us that support the advancement of business and free market economies. Media reports indicate that the Nigerian House of Representatives has escalated the $5.1 billion fine earlier levied against MTN Nigeria to $15.6 billion.

MTN was sanctioned for its failure to disable 5.1 million Subscriber Identification Modules in compliance with government directives.

Nigerian legislators believe that the fine, imposed in October but later reduced downwards to $3.4 billion was arrived at in error because the Nigerian Communications Commission did not follow the law to the letter and was a merely a tap on  MTN’s wrist.

Nigeria being what it is like many African countries, it may be safe to assume that the legislators suspect the remissions in favour of MTN came at the price of undisclosed “costs” to the treasury.

But again, some questions have not been answered and until Nigerian authorities clarify, this is going to look like persecution, opportunistic prosecution, or selective application of the law.

MTN is not the only telecom operator in Nigeria and it would be helpful to know if MTN’s competitors were compliant and if not what sanctions have been brought against them.

In contemporary judicial practice, arbitration is the preferred path in commercial disputes and until demonstrated otherwise, one can safely conclude that the NCC arrived at its decision to reduce the fine to 3.4 billion in this spirit.

Hounding MTN out of Nigeria does not serve the broader economic interests of the country and is definitely going to be a red flag for foreign investment in Nigeria. Ultimately, the losses from this act will surpass the value of the $15bn fine if MTN chose to quit the market.

Nigeria though would not be the first however, to target a big corporation with a spurious fine simply because that business was the more successful. Still last year, the Uganda Communications Commission targeted MTN Uganda with a fine, though of lesser magnitude for similar offenses, simply because the telco happens to be the bigger and more profitable operation.

The UCC which is guilty of such omissions as failure to switch off a Pay-TV operator that continues to broadcast on the DVBT-1 standard, has todate not told stakeholders and the public if the other teleco’s had complied with the order to deactivate unregistered SIM’s. The UCC’s order was eventually stood down by orders from higher quarters but its credibility was left in tatters.

MTN Nigeria may well find reprieve from other sources but at the group level, the operations needs to draw valuable lessons from this episode  – that however big a business may be, it cannot be bigger than a country.

MTN Uganda is guilty of corporate arrogance and is now the subject of a couple of multi-million dollar civil suits because of its big-bully tactics in the market. Whichever way they turnout, such episodes are not good for a business because they dent brand image. I use MTN services, but I too hate bullies and my support should not be taken for granted.