Lesley Stones
16 July 2007
Johannesburg — MTN's cellular network in Benin has been switched off in a dispute over a state-sanctioned demand for a $50m fee to allow it to keep operating, although which side flicked the switch is uncertain.
A network run by rival Atlantique Telecom has also been silenced, leaving about a million subscribers without a service.
The dispute centres on a demand by the telecommunications regulatory authority for the networks to sign new contracts that include a punishing backdated licence fee, up from 5-billion CFA francs to 30-billion. Since operators have already paid for their licences, imposing a backdated price hike slaps them with a bill of $52m just to keep their networks running.
On Friday, MTN issued a statement saying it "regrets to advise that it has temporarily suspended its network in Benin due to the current regulatory uncertainty".
The statement avoided criticism, although analysts have interpreted the demand for a backdated fee as a potentially illegal move to cash in on the lucrative cellphone business by effectively holding the operators to ransom.
MTN said it "diligently applies strict international corporate governance standards across all its 21 operations in Africa and the Middle East ".
The regulator has justified its move by saying the two operators were breaking the regulations by transferring ownership of their licences without permission.
MTN acquired the network in Benin through its $5,5bn takeover of Investcom. Atlantique, which is controlled by Etisalat of the United Arab Emirates, was rebranding a network initially set up by a company called Telecel.
"It appears, following a study of dossiers supplied by the two operators, that this is indeed a substitution of the operator, and not a change of trading name," the regulator said in a statement. It suspended their licences a week ago and threatened to shut them down if they did not sign new contracts that included the 600% hike in licence fees.
MTN serves more than 514000 customers in Benin, placing itself at the midpoint among its 21 operations. Yet each of those accounts is relatively lucrative, spending an average of $21 a month, outstripped only by spending habits of its customers in SA and Cyprus.
Analyst Richard Hurst of BMI-TechKnowledge said the regulator was holding the knife over operators in a move that sent the wrong signal to potential foreign investors.
Benin's regulator intends to impose the backdated licence fees on the country's two other operators, Libercom and Bell Benin, which have apparently agreed to pay.
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