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MTN to pay $1.7 billion Nigeria telecoms fine

10 June 2016, 21:47

Johannesburg - South African telecoms giant MTN said Friday it would pay a $1.7 billion fine to the Nigerian government in a "full and final settlement" over its failure to disconnect unregistered mobile phone users.

The Johannesburg-based company said in a statement that "MTN Nigeria has agreed to pay a total cash amount of Naira 330 billion over three years."

Africa's biggest mobile-phone operator was fined $3.9 billion last year and has since been in negotiations with the Nigerian government to reduce the size of the penalty.

Also read: MTN, Nigeria reach agreement on landmark fine

The company was hit with the huge demand amid fears that some of the 5.1 million affected lines were being used by Boko Haram insurgents.

A Nigerian government spokesman said that he could not confirm the agreement as parliament was still investigating the matter.

"The point should be made that MTN cannot singularly decide on what to pay," communications ministry spokesman Victor Oluwadamilare told AFP.

"As far as Nigeria is concerned, we have to await the outcome of that intervention by the national assembly."

After MTN's announcement, its shares on the Johannesburg Stock Exchange rose as much as 21 percent, on track for the biggest gain since 2008, according to Bloomberg News.

The Nigerian Communications Commission (NCC), the country's telecoms regulator, handed down the fine last year citing an inability to trace users in a country plagued by frequent kidnappings and Boko Haram militants.

The sum was originally set at $5.2 billion before being to lowered to $3.9 billion on appeal.

'Relief to investors'

"MTN is pleased to inform shareholders that the matter has been resolved with the Federal Government of Nigeria," the company statement said.

MTN executive chairman Phuthuma Nhleko "expresses his thanks and gratitude to (the Nigerian government) for the spirit in which the matter was resolved," it added.

MTN paid one instalment in February and has scheduled six other payments to cover the fine by May 2019.

"The news is a huge relief to investors, given the fact that Nigeria ended up not imposing the initial amount of the fine," Dobek Pater, telecoms specialist at the Africa Analysis consultancy, told AFP.

"MTN could not afford to lose a major market such as Nigeria and by paying the fine it shows that they still have faith in keeping their investment there."

Boko Haram violence has left at least 17,000 dead and forced more than 2.6 million people from their homes since 2009.

President Muhammadu Buhari announced in December the group was "technically" defeated but attacks continue.

"The concern of the federal government was basically on the security, not the fine imposed on the MTN," Buhari said in March.

"You know how the unregistered GSM (Global System for Mobile communication) are being used by terrorists.

"Unfortunately MTN was very slow and contributed to the casualties."

The MTN fine dominated South Africa's President Jacob Zuma visit to Nigeria earlier this year.

Relations between the continent's two economic powerhouses have been strained over recent years on issues including economic rivalry and political friction.

South Africa's growth has been undermined by the slowdown in China and falling commodity prices, while Nigeria, the continent's top oil producer, has suffered from low oil prices.



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