Reps reject MTN’s offer to pay N330bn fine.

The House of Representatives yesterday rejected an agreement reached between the Federal Government and MTN that the telecoms giant should pay a reduced fine of N330 billion ($1.7bn) as against the N1.04 trillion ($5.2bn) originally slammed on it by the Nigerian Communications Commission (NCC)..

The NCC had on October 20 last year imposed $5.2 billion on the company for allegedly undermining efforts by the Nigerian government to tackle security challenges and the war on terror and allied crimes, as the telecoms operator allegedly refused to deactivate unregistered mobile phone lines on its network.

Both NCC and MTN had confirmed the development in separate statements yesterday

The Director of Public Affairs of NCC, Mr Tony Ojobo, said in Abuja that MTN would pay the fine in six tranches over the next three years.

The amount, according to him, includes the “goodwill” payment of N50 billion earlier made by MTN to the government.

He said:”The balance of N280 billion will be made in six tranches in the following order:

“By the terms of agreement, MTN will pay N30 billion into NCC’s Treasury Single Account (TSA) with the Central Bank of Nigeria (CBN) 30 days from the date of the agreement dated June 10, 2016.

Other dates of payments include:

• March 31, 2017 – N30 billion;
• March 31, 2018 – N55 billion;
• December 31, 2018 – N55 billion;
• March 31, 2019 – N55 billion and the balance will be on
• May 31, 2019 – N55 billion.”

The agreement and resolutions were signed by Executive Vice Chairman (EVC) of NCC, Prof. Umar G. Danbatta; NCC Commission Secretary, Mr. Felix Adeoye; Chief Executive of MTN, Fredinand (Fredi) Moolman and MTN’s Company Secretary, Mrs. Uto Ukpanah, and witnessed by Mr. Tony Ojobo, NCC, Director, Public Affairs; Mr. Usman Malah, Chief of Staff to the EVC, NCC; Ms Helen Obi, Assistant Director, Legal, NCC and Ms. Amina Oyagbola, Corporate Executive, MTN.

Besides, MTN agreed to :

• “Tender an apology in line with the apology previously tendered in correspondences relating to this matter to the Government of Nigeria and Nigerians within the one month of the execution of this Agreement;
• “Subscribe to the voluntary observance of the Code of Corporate Governance for the Telecoms Industry and would ensure compulsory compliance when the said Code is made mandatory for the telecommunications industry; and
• “Undertake to take immediate steps to ensure the listing of its shares on the Nigerian Stock Exchange as soon as commercially and legally possible after the date of execution of this Settlement Agreement.”

Both parties agreed that the terms of settlement “cannot be altered, varied, annulled or modified in any respect, except by writing duly executed by both parties; and the terms of settlement constitute all the terms and conditions of the settlement and supersede and replace any previous offers, representations and terms.”

The fine is the biggest ever in Nigerian business history.

Danbatta at the signing of the agreement said it was “taken based on professionalism and global best practices, and in line with the NCC core value ‘to be fair, firm and forthright.’”

He added: “ the Commission has always carried industry and stakeholders along in taking transparent regulatory actions, adding that at no point will the regulator do anything to jeopardize the business health of the entire sector.

“We were careful not to take decisions that were likely to cripple the business interest of the operators we regulate. Besides, the downturn of the global economy is biting hard on everybody and every sector, so we must therefore be sensitive and flexible in our decisions”

“This perhaps is one of the attractions of the global communities to the activities of the Commission through multiple awards recently.”

MTN,in its own statement,undertook to: “subscribe to the voluntary observance of the Code of Corporate Governance for the Telecommunications Industry and will ensure compulsory compliance. The company also undertakes to take immediate steps to ensure listing of its shares on the Nigerian Stock Exchange as soon as is commercially and legally possible.

“Always ensure full compliance of its license terms and conditions as issued by the NCC.

MTN Nigeria Chief Executive Officer (CEO) Ferdi Moolman offered the company’s “ most sincere apologies for the series of unfortunate events that led to the imposition of the fine.” He said: “It was of critical importance to reach a solution that would be of universal benefit to all stakeholders given the importance of the ICT industry in Nigeria and its tremendous impact on socio-economic growth. Along with the authorities, we believe that has been achieved.”

Regarding the company’s undertaking to list, Moolman said “MTN Nigeria is undoubtedly one of Nigeria’s success stories. Broader public participation exemplifies this.”

The initial fine of N1.04 trillion was first adjusted by 25% to N780 billion.

MTN deemed the fine inimical to the sustainability of its business and sought judicial determination in December 2015 to protect the extensive local ecosystem, valued and supported by MTN’s business.

However in February 2016, at the request of the Federal Government, the company announced the withdrawal of its case against NCC and made an initial “goodwill” payment of N50 billion in order to create a conducive atmosphere for further negotiations.

Commenting on the final resolution of the NCC fine, MTN Group Executive Chairman Phuthuma Nhleko expressed his thanks to the Federal Government of Nigeria for the spirit in which the matter was resolved saying ‘ this is the best outcome for the company, its stakeholders, the Federal Government and the Nigerian people and the relationship between MTN, the Federal Government and the NCC has been restored and strengthened.’’

Yesterday’s announcement immediately sent shares in the telecoms provider soaring in South Africa.

The shares surged 18 percent to 146 rand after the announcement in their biggest jump since April 2000. They have shed 22 per cent since the fine was announced.

A few days before the imposition of the fine, MTN had said its Nigerian operation lost 5.1 million subscriber lines in the month of August to the deactivation of incomplete SIM registrations ordered by NCC.

This led to MTN cutting its full-year forecast for subscriber numbers.

Rejecting the deal yesterday, the House of Representatives issued an invitation to the Minister of Communications Adebayo Shittu to come and shed light on it on Monday.

 Moments after news of the deal broke, the Chairman of the House of Representatives Committee on Communications, Mr. Saheed Fijabi, told reporters he did not understand the sudden shift in position by the NNCC on the fine.

He dismissed the agreement as unacceptable.

“It came to us as a surprise to hear that MTN is paying N300bn. How can they be paying that amount when the minister told us that everything was stalled pending the outcome of our investigation?” Fijabi asked.

“As a House, we have opposed the reduction of the fine because there is no provision in the NCC’s Act that the fine can be reduced. In fact, Section 21 of the Act stipulates that even the CEO of a defaulting firm can be made to pay additional fine of over N200,000 on each of the lines.”

The lawmaker said ordinarily, MTN’s total fine “should be doubled to about N3 trillion and not even the N1.4 trillion they were asked to pay.”

The committee chair noted that it was wrong to accept a reduction while the House was investigating the ongoing negotiations between the Federal Government and MTN on the fine