Lagos — Nigeria's fine of $5.2bn to MTN, Africa's largest telecommunications company, is billions more than any company has been fined anywhere in the world and may well scare off investors, international analysts say.

MTN was fined for having 5.2 million active but unregistered SIM cards.

"It is totally out of proportion," said industry expert John Strand of Denmark-based Strand Consult. "I have never seen any operator receivinga fine of more $100m and I've been in this business for 20 years."


Until now, the United States tended to levy the highest fines. AT&T is suing the Federal Communications Commission over a $100m fine — the largest ever imposed by that body.

"There is no comparable fine, anywhere in the world," Roger Entner, of Recon Analytics based in Dedham, Massachusetts, said of the Nigerian sanction. "This is far beyond anything that anybody has ever been levied — by magnitudes."

Unregistered SIM cards are a matter of national security in Nigeria and may have caused deaths. Boko Haram Islamic extremists use cell phones to activate bombs and coordinate other attacks, say law enforcers. Mobile phones are also used in rampant armed robberies and kidnappings. Unregistered MTN SIM cards were usedto make calls demanding ransom in theSeptember kidnapping of a former Nigerian finance minister — weeks after a deadline for providers to deactivate unregistered cards.

MTN ignored other Nigerian rules and had committed a total of 28 infractions, Nigerian Communications Commission spokesman Tony Ojobo told The Associated Press.

MTN officers "have always been flouting regulations," he declared.

The company was the only cell phone provider that failed to meet a mid-August deadline to deactivate unregistered cards, said Ojobo. The commission's enforcers wound up deactivating the millions of cards. The fine is based on sanctions of 200 000 naira ($1 000) for each unregistered card, an amount agreed in consultation with service providers in 2011.

Since the fine was announced, the South African-based MTN Group has lost more than 10% of its value. The group CEO resigned last week.

Standard & Poor's downgraded MTN and Nigeria and put both on a negativecredit watch. The credit rating service cited "heightened regulatory and country risk in Nigeria" and fears that MTN's liquidity could "weaken significantly," depending on the ultimate size of the fine and the timingof its payment.

MTN is the biggest player in Nigeria, where it had about 62 million subscribers before the deactivations and, according to Strand Consult, totalrevenue of about $10bn in 2014. MTN said it made $2.6bn in profits in Nigerialast year, making the fine equivalent totwo years' profits and three times the$1.8bn the company says it has invested here.

"Fines like this destroy companies," analyst Entner warned.

MTN extended its Nigeria operating license this month until 2021, for$94.2mn. It had little choice, the analysts said, noting the Nigerian operation provides more than a third of the group's revenues, though it operates in 21 other countries in Africa, the Middle East, Afghanistan and Cyprus.

MTN bought its Nigeria license for$285m in 2001.

"Then, everyone expected it to be a product for the few among the many, but today it is the product for everybody. Nigerians have been able toget affordable telecommunications," Strand said. That's because Nigeria hasAfrica's largest population, estimated at 170 million, and building a telecommunications network costs roughly the same for 1 million or 10 million subscribers, he said. Mobile telephone networks, in a country without working landlines, have immeasurably boosted business and trade.

Entner said the fine will hurt MTN's service to Nigerians. "I think the company can survive it (but) it will probably have to really cut down on expanding, improving the network and make a whole bunch of other cuts."


The fine equals nearly a quarter of the 2014 national budget of Nigeria, Africa's biggest oil producer which has been hammered by the global plunge in petroleum prices and depreciated naira currency.

A review of Nigeria's penalties for tax avoidance and cybercrime, and global precedent, led Strand to suggest a fineof $500m is more fitting.

Strand warned the fine could hurt foreign investment: "The question is: What is the purpose in giving a company a fine of this amount? Is it just a revenue generator for the government? I think it's a big message to send to other investors in Nigeria: Stay out of this country."

http://m.news24.com/fin24/Tech/News/nigerias-52bn-fine-against-mtn-is-worlds-largest-20151120

COOL.

Before the torrent of end time insults/quotes,

MTN treatment of Nigerian customers, world's "baddest".

This is the real definition of 'AGREEMENT IS AGREEMENT'. I can see all the Network providers signed and agreed to the consultation.

Is still too small

they should have not disobeyed the ncc rule at first. the govt can pity them and request for half payment..

This is not a fine as far as am concerned.This is what Nigerians call "You dey do yourself".

Had MTN began a deactivation process of at least half of the 5million lines before deadline,they could have at least used a backdoor negotiation to get a soft landing but they failed to do what was unanimously agreed to by MTN and all other service providers.They are not the only ones met with fine,other service providers are not in this mess cause they listened and did the right thing.