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Nigeria woes sum up challenging 2015 for MTN

23 December 2015, 19:32

Johannesburg - If some adverse events of the year that is drawing to a close are anything to go by, MTN, the continent’s biggest mobile network operator, is happy to see the back of 2015.

It never rained but poured for the South African-headquartered firm that spent most of the year either suffering a protracted strike by some workers on the domestic scene, a multibillion-dollar landmark fine in its biggest market, Nigeria, and a spate of resignations both at home and the West African country.

In May, scores of MTN workers, under the Communications Workers Union went on a protracted eight-week strike citing low pay, insufficient weekend remuneration and lack of transport allowances.

Much to the disruption of services, the strike saw the company's more than

800 call centres being suspended and some shops being shut, in addition to a constant police presence at its offices in Fairlands, west of Johannesburg, where picketers sometimes stoned or threatened passing vehicles.

Also read: MTN Nigeria: Shareholders must exercise caution

The company had to secure an interdict over this.

The strike claimed the scalp of South Africa Chief Executive Officer, Faarouk step down reportedly over “personal reasons.”

His replacement, Mteto  Nyati,  lived to his promise by resolving disputes with striking workers within 7 days  at helm.

Financially, the company’s fortunes took a dip.

While group subscribers increased by more than 3 percent across its 22 markets to 231 million, for the first six months of the year, group revenue decreased by about 5 percent to R69,2 billion.

The company said the results were reflective of a challenging operating environment and lower than expected performance in parts of the business.

In Nigeria, its biggest market, while its subscriber base grew by about 5 percent to 62,8 million, total revenue declined by 1,4 percent.

The performance was blamed on the weak macro-economic environment, aggressive competition and operational execution challenge.

Perhaps the latter best sums the current challenges the company faces in Nigeria.

In October, the Nigeria Communications Commission slapped MTN with a fine of N1,04 trillion, equivalent to US$5,2 billion, following failure to meet a deadline to disconnect 5,1 million unregistered subscribers.

The fine, which has since been reduced to $3,9 billion, not only sent MTN shares tumbling on the Johannesburg Stock Exchange but led to resignations of executives, most prominently Group Chief Executive Officer, Dumiso Dabengwa and the CEO of the errant Nigerian entity, Michael Ikpoki.

Phuthuma Nhleko and Ferdi Moolman have replaced them respectively.

There have been further twists.

Last week, the company said it would challenge the penalty in a Lagos court. MTN continues to engage with the Nigerian authorities even as it seeks a resolution in court.

However, government insisted it would enforce a December 31 deadline amid possibilities another fine would be imposed if the deadline is missed.

This has set the tone for what then looks likely to be an eventful 2016 for the multinational mobile telecommunications company.




- CAJ News


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