MTN’s Record Fine Cut To $3.4B Amidst Management Shake Up

MTN’s Record Fine Cut To $3.4B Amidst Management Shake Up

Nigerian communication regulator has reduced a record $5.2 billion fine it imposed on MTN Group’s unit in the West African country, for failing to deactivate unregistered subscribers in time, to $3.4 billion.

The Africa’s largest mobile phone operator was in October slapped with the largest fine any African company has ever faced by the Nigerian Communication Commission (NCC) for allowing 5.1 million subscribers to continue using unregistered SIM cards after a deactivation deadline expired.

MTN said in a statement that it  had received a formal letter from NCC on Nov. 2, but was “carefully considering” a reply.

“Shareholders are advised that, after further engagements with the Nigerian Authorities, the NCC has reduced the imposed fine,” MTN said.

The Johannesburg-listed mobile operator has been in talks with Nigerian authorities for over five weeks to get the matter resolved. The fine has escalated to a diplomatic issue that will be discussed by president of Africa’s two largest economies — South Africa and Nigeria — later this week.

Reuters reported that MTN was still lobbying to have the fine, which is due on Dec. 31, reduced further. The firm said the reduced fine was still more than two times its average annual capital expenditure of about $1.5 billion over the last five years.

“The fine is still big enough to cripple MTN’s ability to invest in its network and that’s what further talks with the NCC are about,” a unnamed source told Reuters.

MTN also announced a restructuring on Thursday that saw its Nigerian chief executive exit.

The company made a number of senior appointments to support its new operating structure that breaks the company down into three regions: West and Central Africa, South and East Africa and the Middle East and North Africa, the Wall Street Journal reported.

The operator’s subscriber base in Nigeria, which stand at about 63 million, has been on the decline in recent months mainly due to stiff competition and tough regulations, a recent quarterly report showed.

Statistics from the NCC indicates that the West African nation of an estimated 170 million people, has almost 150 million mobile phone subscribers.

Analysts said the NCC directive was heavy-handed and could cost MTN Nigeria at least two average annual profit and nearly three times the $1.8 billion the telecom company invested in the West African  country.