All Categories

MTN to Rebound after N330 Billion Fine

With a reduced fine of N330 billion and a
payment plan staggered over a period of three years, it will not be
long before telecoms giant, MTN Nigeria, rebounds.
Reprieve came the way of MTN on Friday
when the Nigeria Communications Commission (NCC) slashed its fine to
N330 billion (less than $1 billion) from initial N1.04 trillion (which
was $5.2 billion at the time the fine was imposed).
The reprieve came after eight months of
engaging with the regulator over the fine imposed on the telecoms giant
for failing to deactivate 5.2 million unregistered and improperly
registered SIM cards on its network.
In the wake of the fine imposition and
as a consequence of their action or inaction, three top executive
officers of MTN were forced to resign, namely Sifiso Dabengwa , the
Group CEO; Mike Ikpoki, CEO of MTN Nigeria; and Akinwale Goodluck,
Director, Regulatory and Corporate Affairs. The company’s shares also
plunged by 5 per cent when the news of the imposition of the fine broke
last year, before gradually picking up when the telecoms firm began to
engage Nigerian authorities on way out.
With the adjustment of the fine to N330
billion, at a time of looming devaluation of Naira and the prevailing
exchange rate of the Nigerian currency, MTN will be paying less than 20
per cent of the initial value of the fine under terms of agreement which
also discounted the initial N50billion earlier paid by MTN to the
The flexible payment plan also gives MTN
enough breathing space, as it provides that the balance of N280 billion
would be made in six tranches within a period of three years.
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.)
With a profit of about N200 billion in
2015, in one and a half years, it is possible for the telco to settle
the fine from its profit without significant adverse effects on its
balance sheet.
A cursory look at the financial
statement of MTN Nigeria, showed that in 2015, the company recorded a
profit after tax of N190 billion ($955 million) as at 31 December 2015.
Only last Friday, following the news of
reduction in the humongous fine, the Group’s share climbed 13.18 per
cent at the Johannesburg Stock Exchange, South Africa, gaining 16.30
rands to close at 140 rands, which is the biggest gain since 2008.
Besides the company’s high profitability
profile, industry analysts note that MTN Nigeria has the prospect of
even growing bigger following its new business frontiers with the 2.6
GHz licence it got from NCC to stream TV contents. The MTN TV service, a
digital pay TV, which pilot launch has already been done is expected to
converge telecommunications, broadcasting and media.
Analysts are of the opinion that with
the new business model, it could recoup monies lost to fines within the
shortest time possible.
Other aspects of the agreement include
that MTN Nigeria would be listed on the Nigeria Stock Exchange (NSE) as
soon as it is commercially and legally possible, and the tendering of an
apology in line with the apology previously tendered in correspondences
relating to the matter to the government of Nigeria and Nigerians
within the one month of the execution of the agreement.
However, the House of Representatives
Committee on Communications has faulted the reduction of the fine and
summoned the regulatory authority and the Attorney General of the
Federation to appear before it tomorrow.
But the view among industry analysts is that the telecoms giant, in no time would put the issue of the fine behind it.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker