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MTN pays first Nigerian fine instalment

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 30 Jun 2016
MTN says it has already paid its first N30 billion instalment to the NCC, although it was only due next week.
MTN says it has already paid its first N30 billion instalment to the NCC, although it was only due next week.

MTN has paid the first of six instalments to settle a $1.671 billion (R25 billion) fine in Nigeria and has also won an auction for a 10-year spectrum licence in the country.

MTN Nigeria CEO, Ferdi Moolman, says the first 30 billion naira (R1.6 billion) payment towards the settlement has already been disbursed to the Nigerian Communications Commission (NCC).

Earlier this month, the South African-headquartered telecoms operator finally reached a settlement with Nigerian authorities and agreed to pay the government 330 billion naira ($1.671 billion) for the penalty. The original $5.2 billion fine was slapped on MTN last October for failing to meet a deadline to disconnect 5.1 million unregistered SIM cards in the West African nation. The fine was later reduced by 25% to $3.9 billion.

"We are also delighted that the matter of the fine imposed by the NCC was amicably settled in the interest of all parties," says Moolman.

When the settlement was announced on 10 June, the total fine was worth around R25.1 billion. Since then the naira has devalued significantly, and if the total 330 billion naira fine was paid in full today, it would cost MTN R17.3 billion in rand terms.

Nigeria's naira tumbled after the central bank ended a 16-month-long currency peg to the dollar earlier this month.

MTN's N330 billion settlement amount includes a "good faith payment" made by MTN in February when it was still trying to settle the fine. The payment of N50 billion was, at the time, equivalent to R3.8 billion.

As per the settlement agreement, MTN is due to pay the outstanding N280 billion in six instalments over the next three years. The first instalment, which MTN Nigeria says it has already paid, was only due to be paid on 8 July.

Another N30 billion is due on 31 March 2017. Thereafter, four instalments of N50 billion each will be paid on 31 March 2018, 31 December 2018, 31 March 2019 and 31 May 2019.

"The fine we are paying is 330 billion naira, and therefore the [naira] currency movement has no impact on the amount of the fine due to be paid by MTN Nigeria. However, the translation into rand for our results would be impacted by the relative rand/naira rate at the time," Nik Kershaw, head of investor relations for the MTN Group, confirmed with ITWeb.

Additional Nigerian spectrum

MTN also announced it has been declared the winner of the NCC's latest auction for a 10-year frequency spectrum licence, for the 2.6GHz band. The telco says the spectrum licence will guarantee superior performance for wireless networks, especially 4G LTE services in the country.

"This licence acquisition further demonstrates MTN's abiding faith in the future of Nigeria and the resilience of the Nigerian economy. MTN continues to believe in Nigeria and we have expressed this belief in the level of our investment, which currently stands at approximately $15 billion and counting," according to Moolman.

He says MTN Nigeria complied with all the requirements of the auction and made a licence payment of N18.96 billion (R1 billion) to the NCC, emerging as the sole approved bidder for the spectrum.

MTN Nigeria believes there is a need for significant levels of investment in broadband infrastructure and services to "truly launch Nigeria into the information age". According to MTN, Nigeria is one of 28 African countries that currently offers 4G/LTE services; however, the rate of penetration is still restricted to a few major cities.

Moolman says the 2.6GHz acquisition has set the stage for the roll-out of 4G LTE broadband Internet services across the country, starting in the major cities of Lagos and Abuja.

"Our subscribers, especially those in clustered areas such as the major cities, can expect distinct improvements in browsing speed, quality and experience. This means that they will have fast access to high-definition video-streaming, as well as conferencing and calling, lag-free music streaming, and improved data uploads and downloads," he adds.

As of 30 April 2016, MTN had 230.3 million subscribers across its 22 operations in Africa and the Middle East, with over 60 million of those in Nigeria.

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