The Nigerian Communications Commission (NCC) has agreed to reduce the quantum of the fine it imposed on mobile operator MTN after the company failed to disconnect 5.1 million MTN Nigeria subscribers with unregistered SIM cards in August and September. MTN will now have to pay $3.4 billion, instead of the initial $5.1 billion the NCC had called for. That’s going to hurt not just MTN’s bottomline, but its share price, which took a substantial knock when news of the NCC’s punitive measures originally broke.
According to a notice to shareholders issued on Thursday morning, MTN has received a formal letter dated 2 December 2015 from the NCC informing it that the fine has been reduced from the original N1,040,000,000,000 (One trillion, forty billion Naira) to N674 billion. And that it is to be paid by 31 December 2015.
MTN says its executive chairman Phuthuma Nhleko — who is also acting as group chief executive after Sifiso Dabengwa resigned last month in the wake of the Nigeria debacle — “will immediately and urgently re-engage with the Nigerian authorities before responding formally”. Which sounds like code for, “will continue to plead with authorities for greater leniency”.
Shareholders are therefore, unsurprisingly, advised to continue to “exercise caution when dealing in the company’s securities until a further announcement is made”. Expect MTN shares to see a lot of action today, and probably not of the favourable sort.
[UPDATE: MTN on Friday released another statement, the pertinent parts of which follow below.]
On 3 December 2015 shareholders were informed that MTN had received a formal letter dated 2 December 2015 from the NCC (the first letter) informing the company that, after considering the company’s request, it had taken the decision to reduce the fine imposed on the MTN Nigerian business from the original N1,040,000,000,000 (one trillion, forty billion Naira) (the original fine) to 674 billion Naira, which had to be paid by 31 December 2015. The fine relates to the late disconnecting of 5.1 million MTN Nigerian subscribers in August and September 2015. This was a reduction of 35% of the original fine.
Late on 3 December 2015, the day after receipt of the first letter, the company received a further letter from the NCC dated 3 December 2015 (the second letter). The second letter, which was stated to supersede the first letter, informed the company that the fine had actually been reduced by 25% to 780 billion Naira and not by 35% to 674 billion Naira, as was stated in the First Letter. The payment date remained 31 December 2015.
Neither the first letter nor the second letter sets out any details on how the reduction was determined.
The company is carefully considering both the first letter and the second letter, and the executive chairman Phuthuma Nhleko will immediately and urgently re-engage with the Nigerian authorities before responding formally, as it is essential for the company to follow due process to ensure the best outcome for the company, its stakeholders and the Nigerian authorities, and accordingly all factors having a bearing on the situation will be thoroughly and carefully considered before the company arrives at a final decision.
Shareholders are therefore advised to continue to exercise caution when dealing in the company’s securities until a further announcement is made.