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Thursday, October 29, 2015

THAT HUGE $5.2 BILLION NCC FINE ON MTN



It was widely reported on Tuesday the 27th of October 2015 that NCC, the regulatory body for the telecommunication companies in Nigeria had slammed MTN with a huge fine of $5.2 Billion! The fine was to serve as punishment to MTN for failing, contrary to the directive of NCC, to disconnect about 5.1 million phone lines which were not registered as directed by NCC after the end of the August 2015 deadline set by the NCC.

While it is appropriate that MTN be sanctioned for violation of NCC’s directive, the fine levied, N200,000 for every line not disconnected by MTN is huge and could result in crippling the network’s operations.

Analysis of the fine according to AP (Associated Press), may provide some guidance. In the AP report, the $5.2 Billion fine imposed on MTN is equivalent to at least 2 years average profit for MTN and nearly three times the $1.83 (this figure might be a mistake as the figure on MTN's website differs) the telecommunications network has invested in Nigeria. Also, when looked at from the fact that MTN in 2001 paid what now seems like a mere $285 Million for the licence that enabled it to start operations in Nigeria, one can only conclude that the regulatory body has dealt a blow which while it may not result in death for the big telecommunications firm, may send a big part of its operations into a coma for quite a while.

Information available on MTN’s website show that MTN invested a total of $12 billion in the country from 2001 to 2013 and planned to invest additional $3 Billion between 2013 and 2015. The amount invested in the country by MTN was said to include what was spent on getting the largest digital (microwave) transmission backbone across the country, the investment in fibre optic service and the largest network switch centre in the country.

The above are mentioned to serve as a guide to what an amount as huge as $5.2 Billion can achieve.

Indeed, the NCC in imposing the fine on MTN must have borne in mind the provision of Section 2 of its Guidelines on Procedure for Granting Approval to Disconnect Telecommunications Operators. Paragraph (3) under Section 2 of the Draft (Not sure whether it’s still draft or now in force) Guidelines provides that one of the criteria which NCC should consider in deciding whether or not to grant approval for a network operator to be disconnected shall include the public interest to observe the rule of Law and the need to entrench good corporate governance practices among operators.

There is absolutely no doubt that the above guide is a very sound one. I am a firm believer in the fact that the major reason why our dear country has turned out the way it has is because no sanction attaches to wrongdoings. Where the wrong doer is particularly a “big” man or woman, not only is there no sanction, what the wrong doer gets is a reward. This will always have the effect of promoting wrongdoings while at the same time discouraging all those who always want to the right things.

Because of this, I believe very strongly that MTN should be sanctioned for disobeying the NCC directive especially in these days when the country is battling with terrorism and kidnappings and all sorts of other criminal activities. However, much as I support that MTN should be sanctioned, the sanction should not be such as would cripple the operations of the company unless that was the intent of the NCC in imposing such a debilitating fine.

A look through the provisions of NCC’s Guide on Interconnectivity earlier mentioned shows the reluctance by the drafters of that guide to approve the disconnection of any network operator mainly because of how this may affect subscribers. In the same vein, I believe NCC should also bear in mind the larger impact crippling a company as big as MTN may have on the economy. There is no doubt MTN should be sanctioned. But while the sanction should have an impact on the sanctioned in order to serve as deterrence to others, it should not be such that it could kill it.

NCC under Sections 55 & 65(1) of the 2003 Nigeria Communication Commission Act that created it has the power to impose fines in such amounts by exercising its discretion. But just like judges, such discretions are not to be exercised arbitrarily.

As an aside, I wonder what NCC does with all the fines collected from licensees. I remember that NCC slammed huge fines a few years ago on the three major telecommunication networks for the bad services they were rendering. Since then however, the services of the network operators have consistently deteriorated. Perhaps, NCC has to think of another way to enforce provision of good services to consumers of telecommunication services.