MTN takes Nigerian regulator to court

MTN Official Logo

Johannesburg - South Africa's MTN Group will challenge in a Nigerian court a fine imposed by the West African nation's telecoms regulator, saying on Thursday the watchdog had no legal grounds to order the penalty.

The Nigerian Communications Commission (NCC) hit MTN with a $5.2 billion penalty in October for failing to disconnect users with unregistered SIM cards, prompting weeks of lobbying by Africa's biggest mobile phone company to get the fine reduced.

The NCC reduced the fine by 25 percent this month and gave MTN until the end of year to pay. But the operator, according to a source familiar with matter, was still not prepared to pay the reduced fine.

On Thursday, MTN said it had instructed lawyers to take the matter to court in Lagos, saying it had valid grounds to challenge the size of the penalty and manner in which it was imposed.

“The manner of the imposition of the fine and the quantum thereof is not in accordance with the NCC's powers under the Nigerian Communications Act,” it said

The legal action gives MTN more time to resolve the matter as it restrains the NCC from taking any further action if the company fails to pay the fine by the December 31 deadline.

MTN also said the decision to go to court was also prompted by a “review of circumstances leading to the fine” but did not give any details.

Sources have told Reuters that MTN was in talks with the regulator about the exact number of people to be cut off when the NCC, on advice from the state security agency, decided to impose the fine.

Nigeria has been pushing industry players to verify the identity of their subscribers because of worries that unregistered SIM cards were being used for criminal activity in a country facing an insurgency by the Islamist militant group Boko Haram.

Some analysts have said the size of the fine risked damaging Nigeria's efforts to shake off its image as a risky frontier market for international investors. Others said the fine showed Abuja was keen to enforce the law.

Shares in MTN jumped 6.31 percent to R138.20 by 15h11 GMT, paring losses since the fine was imposed to about 25 percent.

Rating agency Moody's downgraded MTN's rating on Wednesday to Baa3, or just one-notch above junk, citing uncertainty around the outcome of the fine in Nigeria, MTN's biggest market.

Separately, MTN said it has paid $196 million in total for operating licences in Ghana and Ivory Coast, it said on Thursday, cementing its position in West Africa.

MTN said it has paid 75 billion CFA francs ($124 million) to extend its operating licence in Ivory Coast.

MTN also said it would pay $67.5 million to Ghanian telecoms authorities to buy a 15-year radio frequency spectrum that would enable it to roll out high-speed networks.