Thursday, 19 November 2015

THE NIGERIAN COMMUNICATIONS COMMISSION’S CASE AGAINST MTN

On the face of it, the N1.04 trillion ($5.2 billion) fine imposed on MTN (Nigeria) by the Nigerian Communications Commission (NCC), and which the company was supposed to have paid some days back would seem excessive. Indeed some have expressed this view and further argued that the regulatory body has overreacted to a corporate misconduct in a manner that sends a discouraging signal to foreign investors. These are, of course, first reactions that, on deeper consideration of the facts and details of the matter, do not hold.

The key facts are that MTN and other telecommunications operators were ordered by the NCC to deactivate subscribers with unregistered or incomplete SIM cards. The deadline issued to complete this was August 11.  The erring company failed to meet this. It needs to be stated that the exercise to register all mobile lines has been on for more than a year and,  no one would reasonably argue that there was not enough  time to do so.  The deactivation of unregistered lines was even more urgent because criminals – kidnappers, terrorists, armed robbers – used these lines to communicate. So it was a matter of both public safety and interest, and also of national security that MTN and other operators complied with the NCC directive. 

Whereas other operators did to a large extent – Airtel had deactivated 2.3 million lines, Globacom 3.5 million lines and Etisalat 3.3 million lines, MTN reportedly kept active 5.1 million lines that should have been blocked.  Repeated warnings to the company by the NCC went largely unheeded.  

Other alleged wrongdoings were that MTN sent junior officers to a meeting called to discuss national security implications of its action with senior officials of the NCC, office of the National Security Adviser, and the Department of State Security (DSS). On another occasion, its officials allegedly prevented an NCC enforcement team from inspecting its equipment. These put together, the regulator has no choice but invoke the full weight of condign punishment.  This is an exemplary measure that should warn others that in the telecoms sector and beyond that doing business in Nigeria is no more business as usual.  And just as well.

It is disappointing that MTN has, in this case betrayed its leadership rank in the sector to breach the law where others behaved responsibly. But the company has also misbehaved in the past. A few months ago, it was reportedly fined the sum of N120.4 million for not meeting the September 1 deadline to deactivate unregistered lines.  Earlier this year, it engaged in the promotion of a tariff plan in contravention of the relevant section of the Nigerian Communications Act, 2003.  The company was ordered to stop. In these instances, was MTN not well acquainted with the legal provisions that must guide its business operations? 

The behaviour of MTN is merely one example of the many whereby both foreign and local companies willfully and brazenly disregard the laws of the land, thumb their corporate noses at regulatory authorities and treat both the Nigerian  government and  Nigerian consumers with  disdain. The Consumer Protection Council (CPC) under a new head had cause not too long ago, to impose a large fine on Coca-Cola for the company’s uncooperative attitude in respect of a consumer’s complaint to the CPC.  Again lately, the CPC, in response to consumers’ complaint of poor quality of service, has had cause to carry out an enforcement exercise in the offices of service provider, Multichoice Nigeria.  In the power sector, the electricity distribution companies (Discos) ignore at will the directives that touch on consumers’ interest issued by the regulatory authority, the Nigerian Energy Regulatory Commission (NERC).

Most outrageous are the reported cases, in December last year,  of  Popular Farms and Mills and Olam,  two Asian-owned  companies that willfully exceeded their  rice importation quotas by 300,204 metric tonnes  and  110, 163  metric tonnes respectively  and  thereby  owed the  Federal Government  unpaid  levies of  N19.379 billion and N9.02 billion respectively.  Instead of paying up, the two companies, according to a statement by the Ministry of Agriculture and Rural Development, chose to write to the then minister of agriculture requesting that their quotas be revised upward and duties to be paid in due course. Companies have the temerity to misbehave so brazenly only because Nigerian officials at one level or another choose to act unethically, in selfish interests, and against the interest of their country and its people.

It is unacceptable that companies would choose to conduct their businesses in willful disregard for the laws of the land; foreign companies commit gross misdemeanor that they would not dare to in their home countries.  But of course, these happen only because the relevant authorities fail to do their duty first as provided by the enabling laws and second, to protect the interests of Nigeria and its citizens. It is obvious that Nigeria flounders because laws are not obeyed and violators are not punished.

For long, patriotic voices, has demanded that regulators do their job; in line with the sacrosanct fact that business must conduct itself only within the ambit of regulations. The NCC has indeed lived up to its duty and other regulatory bodies must follow the example to protect this country from acts of corporate irresponsibility that is killing the nation’s economy and impoverishing the people.  It cannot be stated strongly enough: investors are welcome in Nigeria but must be prepared to conduct themselves with the fullest respect for the nation’s laws.  In a manner of speaking, managers of government and private businesses would be well advised to note that there is a new masquerade in the Nigerian dance arena and the music has changed. Or have themselves to blame.

MTN,  having allowed itself to be made  a costly example,  is paying  an appropriately  high price for its  serious corporate dereliction:  its shares have lost value significantly,  its group chief  executive resigned and  some others are likely to go too, and the company is under pressure to  raise  the hefty fine, it ought to pay by yesterday as  demanded by the regulator. These are just the tangible damages:  the loss in reputation as a leading corporate citizen is severe and will not be easily regained.  Unfortunately, popular sympathy for the company is narrowed by its ownership base of only a small group of investors.  Having done such roaring profitable business in Nigeria over the years, the time has definitely come for MTN Nigeria to follow the act of its parent company in Johannesburg to, in turn, float its shares in the Nigerian stock market.

Can MTN afford to pay a $5.2 billion fine? It certainly can but not necessarily at once.  First, we support that the company works out a payment schedule stretched over a reasonable period. Second, for the reason that it has done so well in Nigeria, many Nigerians as possible should benefit from MTN’s high profitability. To this end, government should purchase shares with the fine when paid and sell same to Nigerians at the Nigerian Stock Exchange.  A broad and questioning ownership may help discourage corporate misbehaviour, besides spreading stock dividends more widely. (guardian)