11 March 2016

Nigeria: MTN Offers to Settle Row With U.S.$1.5 Billion

Photo: Premium Times
MTN Nigeria.

The South African telecom firm, Mobile Telecommunication Network (MTN), has proposed a slash of the $5.2billion fine imposed on it by Nigerian authorities to $1.5 billion.

The hefty fine was imposed last year by the telecom regulator, Nigeria Communication Commission (NCC) after MTN failed to to meet the deadline to deregister 5.1 million improperly registered SIM cards on its network.

The fine was cut down to $3.9billion after the firm entered into negotiations with government, but as the deadline to pay up approached, it filed a suit to contest NCC's powers to fine it.

Last week, however, MTN withdrew the matter from court and paid an initial N50billion, and is now requesting that the overall fine be further reduced to $1.5billion, about N300billion.

However, the Senate Committee on Communication yesterday condemned the manner in which the out-of-court settlement arrangement between the federal government and the (MTN) was being conducted.

The Senate also kicked against the alleged exclusion of the Ministry of Communication and the NCC from discussions on the issue.

At an open investigative hearing on the matter convened by the Committee at the National Assembly Thursday, the lawmakers expressed shock that an account in the name of "recovery account" was opened for the N50 billion fine paid by the MTN as part of the negotiation.

The committee was also worried that a proposal initiated by the MTN for the reduction of the fine to N300 billion had been accepted by the Minister of Justice and Attorney-General of the Federation even without recourse to the Ministry of Justice and the NCC.

It also emerged at the hearing that an initial 25 per cent reduction of the initial N1.04 trillion fine to N780 billion was on the orders of the president.

A document displayed by the committee regarding the proposal from MTN showed that the telecommunication service provider would pay N300 billion, but in installments.

According to the document, the N50 billion already paid is part of this amount.

The parties have agreed that the N50 billion paid in good faith and without prejudice by MTN Nigeria on the 24th on February 2016, in order to commence settlement negotiations, will form part of the monetary components of this settlement.

In five equal and annual instalments between the date of execution of this agreement and December 31, 2020, MTN Nigeria shall pay a total of N100 billion by electronic funds transfer to the federal government recovery account of the Central Bank of Nigeria. This payment will commence by 31 December, 2016, and will be made by 31 December of each subsequent year."

The proposal stated that the MTN would buy N80 billion of Nigeria's foreign bond.

The proposal, which the committee said it got from the office of the Attorney General of the Federation, was admitted by MTN.

It states in part: "As a demonstration of its commitment to, and confidence in the Nigerian economy, and subject to necessary regulatory approvals, MTN Nigeria commits to purchase N80 billion of Nigerian Sovereign Debt issued on international market in 2016 to 2017."

The proposal also showed that MTN would provide Nigeria with access to the company's fibre network for the purpose of allowing the federal government to expand its e-initiatives to the tune of N70 billion.

Defending himself on the allegation of opening the recovery account, the accountant-general of the federation, Ahmed Idris, said he acted on the demand of the attorney-general of the federation, adding that he was never aware of what money was going to be put in the account.

Representative of the attorney-general of the federation, Mr Dayo Akpata, tried in vain to convince the committee about the wisdom in opening the account.

The committee simply insisted that the attorney-general must appear in person before it within two weeks to explain the action.

Chairman of the committee, Senator Gilbert Nnaji, had earlier explained the mission of the committee regarding the investigation.

"As a committee, we find it worrisome, on one hand, that the issue of compliance on the part of MTN could linger till now and, on the other hand, that N50 billion was claimed to have been paid by MTN out of reduced fine of N780 billion.

"Empowered by Sections 88 and 89 of the Constitution of the Federd Republic of Nigeria with the power of oversight over our nation's telecoms landscape, it becomes imperative for the Committee to wade into the matter with special attention to the controversy surrounding the payment of N50 billion by MTN, which accounts for a paltry 6.4% of the total reduced fine of N780 billion.

"In fulfilling our mandate of oversight, we are shocked to gather from the regulator i.e. NCC, that the Commission neither received the payment of the said N50 billion nor was it notified of such payment There were claims and counter-claims on the pages of newspapers that the Honourable Minister of Communications Technology had acknowledged the payment, while other source claimed that MTN paid the money into Central Bank of Nigeria's Recovery Account.

"This is the crux of today's meeting: to establish the veracity of this payment and to which account was it paid, if paid. This is one transaction that has generated public suspicion compelling the committee to invite all relevant stakeholders to this meeting for adequate clarifications to be made on the issue.

"Issues emanating from the foregoing are: Into which account did MTN pay the N50 billion and which government agency acknowledged the payment? If MTN actually paid, why did it disregard payment into NCC's coffers as statutorily obliged? If MTN paid into CBN's Recovery Account, on whose directive did the network do so and what legal riglt does CBN have to lodge the money in a Recovery Account?

These and many more are posers that this meeting seeks to unravel for Nigerians to know the true picture of the situation," Senator Nnaji said.

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