MTN 'sailed too close to the wind' - TechCentral

MTN ‘sailed too close to the wind’

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Africa’s biggest mobile network, MTN, could have avoided a US$5,2bn fine in Nigeria, but regulators in that country have also been harsh on the company.

This is according to Dobek Pater. who is a director and analyst at telecoms, IT and media research firm Africa Analysis.

On 26 October, mobile network MTN announced that it was fined $5,2bn by the Nigerian Communications Commission (NCC) for failing to disconnect up to 5m unregistered Sim cards in that country.

The record fine came after Nigeria kick-started its Sim card registration process in 2013. This registration process in Nigeria was implemented to curb illegal activities with the use of unregistered Sim cards.

MTN is the biggest mobile network in Nigeria with an estimated 60m subscribers.

“It’s up to the networks to register Sim cards,” Pater said regarding the process in Nigeria.

“The registration wasn’t followed through,” commented Pater on the massive fine.

Furthermore, MTN has had to comply with the NCC in Nigeria to keep its licence, which is also up for renewal in 2016.

But Pater further pointed out that MTN could have also lost up to $25m if it disconnected the 5m unregistered subscribers in Nigeria. This is because the average revenue per user of an MTN Nigeria subscriber is $5, said Pater.

“They tried to sail too close to the wind,” he said.

But Pater said that regulators in Nigeria could be seeking to make an example of MTN, especially in light of former Nigerian finance minister Olu Falae having been allegedly kidnapped by a group of herdsmen that used unregistered MTN Sim cards.

“If you get on the wrong side of people with influence, you risk getting your marching orders in Nigeria,” Pater said.

Because MTN is the biggest of Nigeria’s four mobile networks, it’s also been under the spotlight of the NCC for allegedly abusing its market dominance, said Pater.

The NCC has also previously fined MTN, Airtel, Glo and Etisalat in Nigeria for issues such as quality of network services in the country.

Pater, nevertheless, said he expected MTN to reach a negotiation with the NCC over the latest $5,2bn fine.

Meanwhile, MTN said on Monday afternoon that it was having discussions with the NCC over the fine.

This announcement came after the JSE briefly suspended trade in MTN on Monday as unconfirmed reports emerged in Nigeria about the mobile network having reportedly decided to pay the multibillion-dollar fine.

MTN is also facing an investigation by the JSE into how the mobile network announced its Nigerian fine on Sens on Monday, 26 October.

MTN is Africa’s biggest mobile network with more than 230m subscribers in 22 countries across the Middle East and Africa.  — Fin24

3 Comments

  1. How does one “sail too close to the wind”? Is that not what sailing is kind of about?

  2. William Stucke on

    Yes and no.
    You need to understand that the sail is in effect a wing except when running before the wind, in which case it acts more like a parachute. So, when beating (sailing upwind), if you maximise the air speed over the sail – a function of both the wind speed and the boat speed, and their respective directions (vectors) – then you maximise the lift it produces. As the sail is vertically oriented, the “lift” is horizontal – acting to drive the boat forward.
    The closer you sail to the wind, the more efficiently you move forward – and indeed upwind. However, if you angle the sail to close to the wind, it will stall, and you lose all forward force.
    How close to the wind a particular boat can sail is a function of its design and the sails it’s carrying. The skipper’s skill is in optimising how close he can get without stalling and losing the race.
    The idiom refers to taking a risk in order to gain a benefit, and usually refers to illegal or improper behaviour.