How MTN got into so much trouble in Nigeria - TechCentral

How MTN got into so much trouble in Nigeria

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On Monday, the market learnt that the Nigerian Communications Commission (NCC) had hit MTN with a fine of1,04 trillion naira for failing to deactivate unregistered Sim cards by a regulatory deadline. The fine, which equates to more than R70bn, is more than twice the entire group’s annual profits.

The fine follows the NCC’s findings that MTN has not disconnected 5,2m of its users with unregistered or improperly registered Sim cards. The amount is based on a sanction of 200 000 naira per user.

Given the size of the fine, it is not surprising that MTN is trying to engage with the NCC on reducing it. However, there is a long history leading up to the action taken by the regulator, which raises questions about the operator’s chances of finding a sympathetic ear.

The origins of the problems go back to early 2008 when Nigerian security agencies approached the NCC for help in dealing with crimes committed by criminals using mobile phones. At that stage, Nigeria had no regulations in place requiring Sim cards to be registered and so there was no way of identifying the criminals based on the mobile numbers they used.

The crimes include matters such as fraud, intimidation, and kidnapping. The last-named is perhaps the most serious as it a fund-raising tactic of terrorist groups like Boko Haram, who use mobile phones to make their demands.

After lengthy consultations between the NCC, security agencies and the country’s mobile networks, a registration programme was launched in May 2010. Unlike South Africa’s Rica legislation, which requires only that the owner of a Sim card must produce proof of identification and proof of address, Nigeria decided that it would also take a record of biometric information.

Everyone in the country who owned a Sim card therefore had to register personally so that their fingerprints and pictures could be taken. Originally the regulator set a target of six months in which to register all users, but this proved an impossible task in a country where there are 150m Sim cards in use and large numbers of people live in remote areas. The registration process eventually dragged on for almost three years.

Numerous problems were allegedly experienced during the process, including agents charging people to register their phones and operators registering users from other networks to try to boost their numbers.

Some resourceful Nigerians also saw the chance to exploit a regulatory loophole. Realising that many people would either prefer not to register themselves or would not want to travel to the cities where most registrations were taking place, they started “pre-registering” Sim cards and selling them on at a premium.

This obviously defeated the purpose of the process and the NCC issued several warnings to operators to put a stop to it. They claimed that many of these pre-registered cards were being used for criminal purposes.

In 2013, following the deadline to register all Sim cards, the NCC issued the first fines for not meeting the directive. It fined the country’s four operators a combined 53,8m naira (R3,7m).

The fine given to MTN was 29,2m naira (R2m) based on 146 pre-registered cards that had either been reported to the commission or purchased in enforcement actions by the commission itself. The amount was based on the same 200 000 naira per user as the most recent penalty.

It seemed for a while as if the Sim registration story had settled, but then in June 2015 the NCC announced that telecoms operators needed to embark on a round of re-registration. This sparked some allegations that the regulator had lost the original data, but the NCC claimed that it had discovered 38,9m users that had not been properly registered by operators in the first place.

The issues uncovered were mostly poorly taken fingerprints or unclear photographs.

After presenting operators with lists of invalid registration details and giving them until the end of August to rectify the situation, the NCC was moved to act in early September when it imposed 120m naira (R8,2m) worth of fines on them for failing to either properly register Sim cards or disconnect the users. Again, MTN had to pay the largest share.

Reports from Nigeria, however, paint a picture of some confusion around the process. Many people who believed they were properly registered have had their lines blocked, and the operators have been inundated with customers trying to validate their details.

Some sources also suggest that the operators were still in talks with the NCC about the exact number of unregistered users when the deadline passed. They therefore were under the impression that the matter was still being resolved and that they did not yet need to take decisive action.

National security agencies, however, appear to have pushed the NCC to be conclusive on this matter and hence the regulator’s insistence that unregistered users be dealt with. There are suggestions that the agencies were moved by the recent kidnapping of a senior Nigerian politician in which MTN was unable to provide information on the mobile numbers used to make the ransom demands.

Finally, after the regulator claimed that MTN ignored numerous requests to act on unregistered, poorly registered and pre-registered Sim cards, it imposed the most recent penalty of 1,04 trillion naira. Whether or not the operator will end up actually paying that remains to be seen, but it would appear obvious that there is a great deal of work to be done to sort out the relationship between itself and the NCC.

  • This article was first published on Moneyweb and is republished here with permission

44 Comments

  1. Vusumuzi Sibiya on

    >>The crimes include matters such as fraud, intimidation, and kidnapping. The last-named is perhaps the most serious as it a fund-raising tactic of terrorist groups like Boko Haram, who use mobile phones to make their demands.

    I have no empathy whatsoever towards MTN… when law enforcement is seriously attempting to clean-up and business decides that the bottom line comes before the security of the public; then that business is no different to Boko Haram.

  2. The real problem and the source of all this came from the SIM Registration platform. For some reason MTN Group introduced a new provider and platform for SIM Registration. This new platform proved to be unstable and complicated the registration process leading to several million failed registrations as customers were invited again and again to come to MTN offices to re-register days after having done so. There are accounts of customers who had to come to re-register up to 10 times. This problem lead to the inability of the Telecom provider to meet the regulators deadline and hence to sanction.
    Insider

  3. you obviously did not read the article properly! and so you post a bigoted comment based on your own deficient understanding and knowledge of the facts; and perhaps your own prejudice! and so you blame business! Sounds a bit like Zuma blaming Jan van Riebeeck for the social and economic chaos in our own country; and trying to ‘extort’ more and more money from business and tax payers to pay for their own folly and incapacity. Have you ever been in Nigeria and done business there? if you have you will know that chaos prevails! So let’s wait for the facts.

  4. Vusumuzi Sibiya on

    I would suggest to you that you don’t know the facts either;

    …about me and where I do business and nor did you properly read the article which clearly points to prolonged non-compliance given initial deadlines that were set –

    The article BTW is in English and not in the language of Jan van Riebeeck –

    …now use your browser to find Google translate and re-read the article in a language that you are competent in; the fact that in our new democratic society, you are allowed the freedom express yourself as you choose –

    …doesn’t mean that you should foolishly advertise your ignorance.

  5. Vusumuzi Sibiya on

    >>For some reason MTN Group introduced a new provider and platform for SIM Registration.

    …and whose fault would that be…???

    A deadline is a deadline for a reason – why is it ok for MTN to undermine law enforcement… surely that amounts to the same criminal behavior as that which the new regulations are attempting to curb.

  6. Vusumuzi Sibiya on

    Wayne, the on-boarding of subscribers as per new regulations is something that can be achieved and should’ve been, given the extended period during which the subsequent fines imposed on the operators –

    …simply had the effect of them laughing in the face of the NCC as they paid and continued with their non-compliance delay tactics;

    …and besides, the disconnecting of unregistered sims by 11 August is not something that is difficult to do – and the only reasoning for not doing so, would be to continue to collect revenues off what would potentially be criminals with unregistered sims operating on MTN’s network.

  7. Wayne Gemmell on

    3.9 million subscribers is an insane amount to sort through in two months and a hell of a lot of people to take off your books. Keep in mind that almost none of those people would be criminals and criminals don’t go through these sort of channels if they have half a brain.

  8. Vusumuzi Sibiya on

    You can’t guarantee that none of those people would be criminals, the regulations are in-place to curb the crime scourge being perpetrated using such sims…

    >>criminals don’t go through these sort of channels if they have half a brain.

    It is a fact that numerous crimes have been committed utilizing the networks and the operators were not in a position to assist law enforcement adequately, hence the introduction of these regulations which the operators are undermining; and in so doing, behaving no different to those criminals.

  9. Wayne Gemmell on

    I do agree that the regulations sound good on paper, the problem, as they have already found is that there are loopholes and workarounds that criminals use to work around this sort of thing. The nett effect is an extremely expensive, onerous process that does little but inconvenience people that choose to comply with the regulations.

    Either way, processing those 3.9 million people in two months would have been quite difficult.

  10. Vusumuzi Sibiya on

    >>Either way, processing those 3.9 million people in two months would have been quite difficult.

    You are conveniently glancing over the fact that it was initially 6months extended by more than 3years for all stakeholders to cooperate fully and work towards effectively ensuring that the regulations are adhered to, rather than undermining the process through non-compliance in an attempt to protect the bottom line.

  11. Wayne Gemmell on

    Not at all, they could probably have moved faster and avoided the first round of fines but the latest round is ancillary to the original issue. I’ll quote below.

    “It seemed for a while as if the Sim registration story had settled, but then in June 2015 the NCC announced that telecoms operators needed to embark on a round of re-registration. This sparked some allegations that the regulator had lost the original data, but the NCC claimed that it had discovered 38,9m users that had not been properly registered by operators in the first place.

    The issues uncovered were mostly poorly taken fingerprints or unclear photographs.

    After presenting operators with lists of invalid registration details and giving them until the end of August to rectify the situation, the NCC was moved to act in early September when it imposed 120m naira (R8,2m) worth of fines on them for failing to either properly register Sim cards or disconnect the users. Again, MTN had to pay the largest share.”

    That seems like a tall ask.

  12. Vusumuzi Sibiya on

    >>This sparked some allegations that the regulator had lost the original data, but the NCC claimed that it had discovered 38,9m users that had not been properly registered by operators in the first place.

    So… from what you’ve also quoted, there is indeed probable cause to find that the registration had not been done properly by the operators in the first place, which undermined the very purpose for introducing the regulations – and still in your opinion the operators are completely without blame.

  13. lisacambell46 on

    I will also send you a banana to come down,both of us are monkey,but the different is that am a black man and you a white money,have you ever heard of a colored monkey

  14. lisacambell46 on

    Eish you most stop eating eagle eyes and ostrich eggs as it reducing your dick 1 inches long

  15. lisacambell46 on

    We do not need it,have you heard a telecom giant been own by Nigeria,you white people think that you are better than others,there a lot of telecom company that are willing to replace MTN,i bet you,Nigeria own communication companies

  16. lisacambell46 on

    Have you heard about Glo com and many more,MTN should pay or go back to Europe,because it not a South Africa company

  17. lisacambell46 on

    And all those South Africa business in Nigeria,we have given then enough room as an African business to grow,but they are taking us for granted,we will deal with them after one another

  18. Vusumuzi Sibiya on

    You need to calm down…

    …the NCC has managed to force MTN to do the right thing – Congratulations to effective law enforcement and let’s hope we see this being carried through across to other areas, not just in Nigeria but in all other African countries.

  19. Every village has an idiot and it is obvious you are that total idiot….. MTN was started in South Africa in the 1990’s still owned by South Africa and is trading on the JSE …… since then has expanded it’s operations into Africa and the Middle East…. Nowhere in Europe as you stated ….. why don’t you Google the business I’m sure you will find the correct information…..and stop behaving like a stupid uneducated idiot

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