Market welcomes MTN’s $250m payment to NCC

The market yesterday widely welcomed steps by telecoms giant, MTN, to de-escalate tension in its relationship with the Nigerian Communications Commission (NCC) by pulling out of a court case it instituted and also paying a hefty N50 billion to the coffers of the regulator.

MTN shares rose 2 per cent on the Johannesburg stock exchange after the announcement of the withdrawal of the court case, as well as payment of about $250 million by the company.

Analysts said the steps should pave the way for a negotiated settlement by creating a conducive atmosphere for further negotiations by the parties.

MTN Nigeria had filed a case against the NCC at a Lagos High court about two months ago, in a bid to resolve the crisis over the unprecedented N1.04 trillion fine imposed on the company by the Nigerian regulator.

MTN Nigeria CEO  Ferdi  Moolman,  said of yesterday’s development,  “this is a most encouraging development. It demonstrates a willingness and sincerity by both parties to work together towards a positive outcome”.

Moolman added, “ we are hopeful at this stage. Along with the  authorities , it is clear that   we are  collectively committed to working towards  a solution that is of mutual benefit to all parties.

“Our industry in  Nigeria is  an incredibly  important example  of  the remarkable progress in  ICT,  particularly as a much needed  catalyst for socio economic growth and development  at this time”.

  The NCC had imposed the fine on MTN Nigeria in October  2015,  for its failure to disconnect 5.1 million improperly registered  lines within the prescribed deadline.

Subsequently the fine was adjusted by 25% to N780 billion  ,an amount that was considered inimical  to the survival of the business.

The original amount was based on fining the company $1,000 for every unregistered SIM card in use.

MTN Nigeria subsequently sought  judicial determination as a means of protecting the business.

In South Africa, the group issued a statement saying, “MTN Nigeria has today made an agreed without prejudice good faith payment of N50billion ($251.3m) to the federal government of Nigeria on the basis that this will be applied towards a settlement, where one is eventually, hopefully arrived at.”

MTN, which makes 37% of its sales in Nigeria, said it would continue to make effort to reach an amicable settlement.

Nigerian authorities decision to levy the penalty, which has been cut from an original $5.2bn, has weighed on MTN’s share price and threatens its profits. The company has engaged Eric Holder,  former US attorney-general under Barack Obama, to help reach a settlement.

MTN said yesterday that Phuthuma Nhleko, its group executive chairman, is leading negotiations with the Nigerian government.