Telecom Giant MTN to Pay Nigeria the Sum of $1.7 Billion

Mark Babatunde June 13, 2016

Telecom service provider MTN has agreed to pay a fine of $1.7bn to the Nigerian government. This is coming after a series of negotiations that have seen the fine reduced from an initial $5.2bn.

In October 2015, the Nigerian government, through the Nigerian Communications Commission (NCC), had slammed the penalties on MTN for its failure to meet the deadline for the deactivation of all unregistered subscribers on its network.

In 2010, Nigeria ordered all telecom service providers to commence the mass registration of all subscriber identity module (SIM) cards on their networks to fight a wave of criminal activities like internet fraud, terrorism and kidnapping that were carried out or aided by the use of mobile telephony.

In August 2015, at the expiration of the deadline for the registration, an audit by the NCC confirmed that MTN had an estimated 5.2 million unregistered subscribers on its network which it had not disconnected. The NCC proceeded to impose an unprecedented fine on MTN of $1000 or N270,000 for each unregistered subscriber, totaling $5.2bn in fines.

The announcement of the fine was soon followed by the resignations of MTN’s then-Chief Executive Sifiso Dabengwa and other top management staff within the organisation. In the hours following the announcement, MTN consequently suffered a 14% loss in market value on the Johannesburg stock exchange, and trading on its shares had to be suspended.

In response to the panic expressed on the floor of the stock exchange, new CEO Phuthuma Nhleko facilitated a bilateral diplomatic engagement on the issue between presidents Muhammadu Buhari of Nigeria and Jacob Zuma of South Africa. President Buhari’s meeting with his South African counterpart helped broker a new deal that saw MTN’s fine slashed from $5.2bn to about $3.2bn.

MTN however continued to maintain that the fine would seriously reduce their profitability. The matter continued in the courts with both parties and a number of civil society groups issuing a series of suits, counter suits and restraining orders.

MTN then opted for an out-of-court settlement and reportedly hired ex-US Attorney General Eric Holder, who visited Nigeria in January 2016 to negotiate on its behalf. Speaking on behalf of the Nigerian government, Communications Minister Adebayo Shittu announced a list of conditions for an out-of-court settlement, including among other things a complete withdrawal of all MTN’s pending suits from the courts.

On the 10th of June, MTN finally announced it had reached an out-of-court settlement, which would see it pay the sum of $1.7bn over the course of three years. An NCC spokesperson has also confirmed the report.

Last Edited by:Deidre Gantt Updated: June 19, 2018


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