Nigerian kidnapping triggered MTN fine

Lagos – When Nigeria failed to trace owners of SIM cards used by
kidnappers of a prominent politician in September, it was the final
straw for the west African country after what it called a string of
violations by telecoms firm MTN Group.

 Africa’s biggest mobile phone company was given a $5.2 billion penalty by the Nigerian Communications Commission (NCC) last month after the South African company failed to
cut off users with unregistered SIM cards from its network.
Nigeria has been pushing industry players to verify the identity of
their subscribers on worries that unregistered SIM cards were being used
for criminal activity in a country facing Islamic militant group Boko
Haram’s insurgency.
The fine, which is based on a $1 000 for each phone line MTN failed
to cut off, has left investors, including its biggest shareholder,
wondering how the company failed to comply with the law that carried
that such a heavy penalty.
“We are equally concerned that MTN seems to have failed to anticipate
the fine and take preventative actions,” said the Public Investment
Corporation, MTN biggest shareholder with about 16.6 percent stake.
The NCC raised the prospect of a penalty on MTN Group and other
players in Africa’s biggest economy at least two months before imposing
the fine on the Johannesburg-based company.
But the final straw for MTN, according to an NCC source, came a month
after the high profile kidnapping of former Nigerian Finance Minister
and runner-up candidate in the 1999 presidential election, Olu Falae, on
September 21.
Conflicting numbers
The company said this week that it was in talks with Nigerian
authorities about a penalty which would wipe out more than two years of
annual profit.
When the NCC imposed the penalty MTN had been talking with the
regulator about the exact number of people that needed to be
disconnected from the network, two sources familiar with the matter.
In a meeting with the state security agency and all operators on
August 4, the NCC had asked MTN to cut off between 10 and 18.6 million
users but MTN told the regulator that it only had 5.2 million users
whose identity could not be verified, an NCC source said.
“MTN was under the presumption that it can carry on business as usual
because it was still in discussion with the regulators,” the source
said.
MTN has said the fine related to the “timing of the disconnection” of
subscribers and is expected to argue that it could not cut off any
subscribers by the deadline date because it had been in talks with
regulator.
By September, other operators, which include United Arab Emirates’
Etisalat and India’s Bharti Airtel, had fully verified their users and
cut off those they could not verify their identity while MTN had made a
“partial attempt”, the NCC said.
Then, on October 22, four weeks after the abduction of Falae and
about two months after the August deadline, the NCC, on advice from the
state security agency, decided to impose the fine but only made it
public four days later.
“These SIM cards with invalid registrations pose a grave security
risk to the country,” the NCC memo said. “The recent kidnapping of the
former finance minister Chief Olu Falae is one example of this risk.”
MTN also faces a Johannesburg bourse investigation on the timing of
its announcement of the penalty. The company declined to comment.

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