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Africa

Nigeria suspends $5 bln fine for MTN over SIM cards until talks end

The South African telecoms giant MTN has won a respite from a $5 billion fine at the very last moment. The penalty was imposed by Nigeria over unregistered SIM cards. It also triggered the CEO's resignation.

Südafrika Sifiso Dabengwa

MTN's CEO Sifiso Dabengwa resigned over the NCC fine

South African telecom giant MTN was due to pay $5.2 billion (4.9 billion euros) to the Nigerian Communications Commission (NCC) by Monday, November 16, 2015 for failing to deactivate 5.1 million unregistered SIM cards.

MTN said on that day it had agreed with the NCC that the fine would not be payable until the end of negotiations entered into by acting MTN executive chairman Phuthuma Nhleko.

A company statement said Nhleko has personally met with the Nigerian authorities "to continue the ongoing discussions" and that they have "without prejudice, agreed that the imposed fine will not be payable until negotiations have been concluded."

Nhleko took over the running of the company for six months from CEO Sifiso Dabengwa who resigned a week ago (09.11.2015).

The NCC issued the fine to MTN over SIM cards at the end of October. The Nigerian government says criminals and Boko Haram militants were using unregistered SIM cards to communicate.

Nigeria Abuja Bombenanschlag

Authorities say cell phones are used to coordinate attacks by Boko Haram militants and in kidnappings and armed robberies.

The NCC also said MTN had received numerous warnings over unregistered or poorly registered SIM cards. SIM cards with invalid registrations were "a grave security risk" as the owners of the phones could not be identified, the regulator added.

MTN has 233 million subscribers in Africa, Asia and the Middle East. Some 60 million are in Nigeria, where they account for 37 percent of company revenue.

MTN saw it share price fall by more than 25 percent after news of the $5.2 billion fine broke.

Impact on Nigeria

Saleh Abdullahi, who worked as a top employee with the former state run Nigerian telecom operator NITEL/MTEL, told DW the fine was "too huge considering the role the company played in employing a lot of Nigerian youth."

Youth unemployment in Nigeria has reached alarming proportions. The country's National Bureau of Statistics said that 28 percent of Nigerians between the ages of 25 and 34 were jobless in the second quarter of 2015 and the figure for the same period for 15 to 24-year-olds was 49 percent.

The fear is that mass unemployment can cause social problems and increase the risk that young people turn to radical groups.

Nigeria Kabinett Muhammadu Buhari Präsident

President Muhammadu Buhari has pledged to defeat Boko Haram and diversify the economy

Another issue weighing on the minds of Nigerian policy makers is the possibility that the fine might escalate into a trade or diplomatic spat with South Africa.

Separately, the Johannesburg Stock Exchange has launched an investigation into MTN for "possible insider trading" before the company announced it had been hit by the fine.

The probe could result in South Africa's bourse operator slapping MTN with another penalty or result in criminal charges.

Adebayo Shittu, who was sworn in as Nigeria's telecommunications minister by President Muhammadu Buhari last week, told Reuters "nobody wants MTN to die. Nobody wants MTN to shut down."

Buhari was swept into power this year on a reform platform which included reducing Nigeria's dependence on oil.

Shittu said he thought telecoms were key to helping Buhari diversify Nigeria's economy.

Nigerian consultant Yusha'u Aliyu told DW he believed that the NCC and MTN "will definitely find a level playing field."

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