MTN Told To 'Obey Laws' After Nigeria Fine

Image source: fin24

South Africa's government appears to have left mobile phone giant MTN to fend for itself as it tries to reduce the US$5.2bn (£3.3bn) fine imposed on it by Nigeria, says South Africa's respected financial publication fin24 on its website. It notes that Deputy President Cyril Ramaphosa, the former chairman of the South African-owned company, said he expected MTN to obey the laws of the countries where it does business.

BBC News report continues:

"We would like our companies to comply with the laws and regulations of countries where they operate, without violating those," he told lawmakers yesterday.

"It does seem, like in the case of Nigeria, there were issues, and those issues need to be addressed," Mr Ramaphosa added.

He said the fine would affect South Africa.

"If this fine is indeed imposed as it is, it is going to impact on South Africa as well, as our revenue fortunes from a taxation point of view are going to be lower."

MTN shares have slumped 14% since 26 October, when Nigeria's industry regulator imposed the fine for failing to disconnect customers with unregistered phone cards, Fin24 says.

Ramaphosa: MTN Must Obey Nigerian Laws

MTN Group [JSE:MTN], Africa’s biggest mobile- phone company that’s facing a US$5.2bn fine in Nigeria, must follow the rules in countries where it does business, Deputy President Cyril Ramaphosa said.

“We will obviously be taking note of what is happening with a view of seeing how the company involved responds and reacts in this matter,” Ramaphosa told lawmakers in Cape Town on Wednesday. “We would like our companies to comply with the laws and regulations of countries where they operate, without violating those.”

The comments by Ramaphosa, a former chairperson of MTN, suggest South African authorities may leave MTN to fend for itself as it seeks to have the penalty reduced. MTN shares have slumped 14% since October 26, when Nigeria’s industry regulator imposed the fine for failing to disconnect customers with unregistered phone cards.

The Nigerian Communications Commission has given MTN until November 16 to pay the fine, which relates to the timing of the disconnection of 5.1 million subscribers and is based on a charge of 200 000 naira (U$1 005) for each unregistered customer. Nigeria is Johannesburg-based MTN’s biggest market with 62 million clients as of September.

“It does seem like in the case of Nigeria, there were issues, and those issues need to be addressed,” Ramaphosa said.

“If this fine is indeed imposed as it is, it is going to impact on South Africa as well, as our revenue fortunes from a taxation point of view are going to be lower.”

South African authorities may be reluctant to confront their Nigerian counterparts following a series of diplomatic spats that have soured relations between Africa’s two biggest economies. The most recent occurred in April, when Nigeria’s government ordered its two most senior diplomats in South Africa to return home for consultations following a wave of attacks against immigrants, including Nigerians, in Johannesburg and Durban.

“South Africa does not have a track record of defending its national company champions internationally,” Nic Borain, a political analyst who advises BNP Paribas Cadiz Securities, said by phone. “On the face of it, this fine seems seriously over the top. Ramaphosa’s words about the issue seem weak as they veer too much on the side of caution.”

MTN summoned

South Africa’s telecommunication and finance ministries didn’t immediately respond to calls and emails seeking comment.

Lawmakers plan to summon MTN officials to explain why the company was fined, Nkhensani Kubayi, chairperson of Parliament’s telecommunications committee, said by phone from Cape Town. The panel also intends questioning the South African industry regulator to determine whether MTN is compliant with local rules, with hearings likely to take place next year, she said.

“I believe the South African government should be doing more than having a watching brief on what MTN does,” Athol Trollip, a lawmaker for the main opposition Democratic Alliance, said by phone. “They should give leadership on this.”