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MTN Nigeria NCC saga deepens

MTN Nigeria NCC saga deepens

Beleaguered mobile operator MTN Nigeria will have to pay the entire amount of the NGN1.4 trillion (US$5.2billion) fine it received from the Nigerian Communications Commission (NCC) for allegedly violating a SIM deactivation directive, and the country's Presidency has reportedly reaffirmed the deadline of 16 November for repayment, according to regional media reports.

Today CAJ News Agency reported that the mobile operator was unsuccessful in its attempt to have the fine reduced and the media agency quoted an anonymous official from the telco as saying the Presidency has insisted on payment.

There are plans for a staggered payment arrangement, the source added.

Media representatives from the MTN Group could not confirm the reports.

Meanwhile, according to the Lagos-based Vanguard, meetings have taken place between Nigeria's Presidency, representatives from MTN Nigeria and South Africa, and MTN is believed to have accepted the fine.

The publication also reported that stakeholders within the telecommunications industry have bemoaned the fine and voiced concern over the impact it would have on the country's business environment.

The Premium Times has quoted the civil society organisation Advocacy for Societal Rights Advancement and Development Initiative (ASRADI) as supporting the NCC's action, calling a "bold and gratifying" decision, the publication writes.

An article by Deloitte entitled Africa from the inside – Spotlight on Nigeria, which includes reference to the MTN Nigeria fine as well as Stanbic Nigeria reportedly facing sanctions as a result of alleged irregularities related to its financial statements, states that strict compliance with local regulations is likely to become a major factor of doing business in Nigeria.

According to the report, in its most recent forecast for Nigeria, the IMF cut the country's 2015 GDP growth rate from 4.5% to 4%, in contrast to actual growth of 6.3% in 2014.

"To mitigate the risk of being perceived as a less-friendly investment destination, the development and use of stronger international arbitration processes might help to strike a balance between regulators and the market going forward," writes Deloitte.

On Friday MTN issued a cautionary announcement advising shareholders to "exercise caution when dealing in the Company's securities until a further announcement is made".

Africa Analysis Managing Director Dobek Pater is of the view that the NCC seems to have wanted to prove a point and make an example of MTN.

There is an intention to penalise operators for not disconnecting unregistered subscribers and this stems from operators "sailing too close to the wind" and maintaining subscriptions and wanting to maximise revenue, Pater said.

This latest issue is not likely to put investors off Pater added, because Nigeria remains an attractive proposition with it size, resources and growing middle class. Sectors like agriculture continues to grow. However, it does illustrate a need for corruption on various levels to be addressed because it is impacting on growth and the country could be growing at a higher margin of percentage points.

"If you play by the rules and follow the law, while it will not be plain sailing... by and large you shouldn't have any reason to be worried. I believe investors will consider this case on its merits," Pater added.

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