The fate of MTN is now in the hands of Nigerian President Muhammadu Buhari as he now must decide the course of action to follow after MTN pleaded for leniency over a massive fine threatening to cripple the cellphone giant.
MTN’s run-in with the Nigerian authorities emerged last month, sending the stock tumbling and raising doubts about the company’ s outlook after the Nigerian Communications Commission (NCC) slapped it with a $5.2 billion (R73bn) fine for the failure to disconnect 5.2 million unregistered users.
“The (communications) minister (Adebayo Shittu) said in Lagos that it will be up to the president to determine which direction to go since MTN asked for leniency,” ministry spokesman Tajudeen Kareem was quoted by Reuters as saying yesterday.
MTN spokesman Chris Maroleng said the company had no update to make on the fine.
“MTN is still engaged with the authorities in Nigeria regarding the fine,” he added. Maroleng said that MTN noted reports that President Buhari would decide “in which direction to go” with a $5.2 billion fine but the group had no comment to make on the reports.
Even so, the suggestion that Buhari might now determine the way forward may confirm what analysts had long feared – turning the matter into a political and a diplomatic issue.
Analysts had said, in any event, this would be inevitable.
On November 9, Phuthuma Nhleko, MTN’s chairman who has now been roped in as caretaker chief executive, told Business Report that the company hoped for a speedy resolution to the matter, saying talks could take “two weeks or whatever”.
But as of yesterday, there remained no word about what sort of progress Nhleko had made, if any, in his bid to have the fine reduced.
The only concession so far from the Nigerians was the rescinding of the November 16 deadline that the NCC had put in place for MTN to pay up. Both parties agreed to have the deadline fall away while their discussions over the fine continued.
The Nigerian fine is the biggest crisis ever to hit MTN in its 21-year history. It caps an ambitious strategy to capitalise on rising demand for mobile services by aggressively expanding into the rest of Africa.
MTN now makes more money outside South Africa, where it was founded and still has its roots.
Nigeria is MTN’s biggest and most lucrative market on the African continent.
Even though the Nigerian authorities initially said the MTN matter fell out of the ambit of their presidency, analysts had said they expected that the governments would be drawn into the fray somehow as the matter had the potential to affect relations between Pretoria and Abuja.
Fallout from the fine led to the departure of MTN chief executive Sifiso Dabengwa earlier this month.
There has also been a call by the Public Investment Corporation (PIC) for more people to be held accountable. The PIC, which is MTN’ s largest shareholder with a 16.63 percent stake, said a lot more people needed to take collective responsibility for the violations in Nigeria.
Nigeria has been pushing operators to verify the identity of their subscribers, concerned that unregistered SIM cards were being used for criminal activity in a country also fighting an insurgency by Islamist militant group Boko Haram.
MTN’s stock price has sunk more than 25 percent since the penalty was announced on October 26 as the size of the fine is equivalent to more than two years profit for the firm. MTN shares yesterday lost 1.91 percent to R141.91 on the JSE.
Two weeks ago, Shittu told Reuters in an interview that “nobody wants MTN to die” as a result of the penalty.
God don catch them. Awon were.
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