MTN big wigs meet as fine remains unresolved

Senior leaders from MTN’s South African headquarters led by executive chairman Phuthuma Nhleko are in Nigeria for a crucial meeting with their Nigerian counterparts as Africa’s largest telecommunications firm grapples with a $3.9bn fine imposed by Nigeria’s regulatory agency NCC.

Today’s meeting is holding in the background of virtually no movement by Nigerian authorities for a further cut in the unprecedented fine which some say threatens to snuff life out a company Nigeria once passed off around the world as best example of how to flourish in the country’s difficult investment landscape.

President Muhammadu Buhari who is credited with approving the 25% cut, is believed to have held a brief informal chat with his South African counterpartm Jacob Zuma, on the sideline of last week’s China-Africa Summit but it is unclear if the matter was broached by both men.

Last week, Bloomberg reported that MTN Group Ltd., Africa’s largest phone company, isn’t prepared to pay the revised $3.9 billion fine and will continue to seek a compromise, according to a person familiar with the matter.

While the Nigerian Communications Commission (NCC) last week cut the penalty on the company by 25 percent from the original $5.2 billion, MTN still considers the punishment too severe, said the person, who asked not to be identified because the matter is private. MTN has no plans to leave the West African country, which is its biggest market with about 63 million customers, the person said.

Nigerian authorities imposed the fine on MTN for failing to meet a deadline to disconnect 5.1 million unregistered subscribers. The company’s shares have declined about 29 percent since the penalty was made public on Oct. 26, and traded 2.7 percent lower at 136.18 rand as of 3:26 p.m in Johannesburg on Friday.

The NCC originally reduced the penalty by 35 percent to $3.4 billion, before changing the payable sum to $3.9 billion after noticing a typo in the letter to MTN detailing the change, the regulator’s spokesman Tony Ojobo told Bloomberg. The payment is due by Dec. 31.

MTN will eventually have to reach an agreement with Nigerian authorities or risk being expelled from Africa’s most populous country with about 180 million people.

MTN chairman, Nhleko, is leading negotiations with the NCC after Chief Executive Officer, Sifiso Dabengwa resigned last month. 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 all the group’s revenue.

By our reporter