MTN faces Benin deadline

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 18 Sept 2007

MTN has 30 days, from 15 September, to pay Benin an initial $30 million (about R216 million). This is in terms of a settlement that ended a two-month standoff between the multinational mobile phone provider and the tiny West African state.

Benin switched off MTN's network, cutting off 500 000 subscribers, on 12 July, after MTN refused to accede to a new set of licence conditions, which included a steep increase in fees.

One reason for the service suspension cited in news reports at the time was that MTN had changed the name of its operation in the country without the regulator's consent.

MTN acquired its Benin operation when it bought Lebanon-based Investcom for $5.5 billion last year.

In a joint statement with the Benin authorities late yesterday, MTN, now again using the name Spacetel, in Benin, said: "In terms of the agreement, Spacetel shall participate in the new licensing framework for telecommunications operators in Benin, from the effective date of the new licence.

"Spacetel shall pay a licence fee of $60 million for a new, extended licence. Of this amount, $30 million is payable within 30 days of the signing of the new licence agreement. The balance of $30 million is payable in equal instalments of $4.2 million (per annum) over seven years, commencing on 15 September 2008."

As part of the new agreement, the Benin government has undertaken to:

* Issue a new GSM licence to Spacetel, valid for a further 10 years from the date of signing the new agreement.
* Grant Spacetel a corporate income tax holiday for a period of three years.
* Reduce various annual licence fees from 6% to 3%.
* Grant Spacetel an exemption on custom duties for five years.

The Benin government has also undertaken, "in good faith, to facilitate that the new telecommunications regulatory framework be adjusted in Benin, grant Spacetel an extension of the licence period for a further five years, subject to various developmental performance targets still to be agreed.

"In addition, the government of Benin will, in good faith, endeavour to facilitate the extension of the corporate tax holiday for a period in excess of three years."

MTN spokesperson Pearl Majola says the company will rebrand Spacetel "in due course".

The settlement amounts to an about-turn for MTN. MTN Group CEO Phutuma Nhleko in late August accused Benin of flouting the law. "We have said to them they are acting outside the provisions of the licence, they are acting outside local law and they are acting outside international law," he said, adding that he expected Benin to abide by its own licence conditions.