MTN says it’s ‘not arrogant’ regarding regulation

Johannesburg - Africa’s biggest mobile network MTN [JSE:MTN] has defended its relationship with regulators, in response to an analyst's criticism of the company.

Arthur Goldstuck, the managing director of technology research firm World Wide Worx, told Fin24 that MTN “lacks respect for regulators” after the Nigerian Communication Commission (NCC) fined the mobile network $5.2bn for allegedly failing to disconnect 5 million unregistered SIM cards in a timely manner.

MTN has also run into problems with regulators in South Africa, said Goldstuck.

“MTN has continued to threaten the regulator with legal action in South Africa with regard to mobile termination rates,” Goldstuck told Fin24.

“What’s happening in Nigeria is perhaps the ultimate fallout.

“It indicates a lack of respect for the regulator and ties to their corporate culture,” said Goldstuck.

He said MTN’s problems with regulators is a sign that it needs a shakeup of its overall corporate culture, which “seems to revolve around revenue and profit at all cost” and which is “at odds with consumers, investors, regulators and competitors”.

But the group executive of corporate affairs at MTN Group, Chris Maroleng, said his company respects international regulations in the 22 countries where it operates across the Middle East and Africa.

“There has been speculation and false information about the nature of our relationship with regulators in Nigeria,” Maroleng told Fin24.

“The relationship is ongoing. Notwithstanding the current issue, we continue to engage with the regulator in Nigeria,” he said.

On Tuesday morning, MTN announced in a market update that the NCC has granted an extension to the mobile network’s operating spectrum in the 900MHz and 1 800MHz frequency bands along with its digital mobile licence to August 31 2021.

“The extension of our licence in many ways reaffirms the confidence in the way in which MTN has operated and complied with regulations,” Maroleng told Fin24.

Meanwhile, the fine in Nigeria specifically relates to the disconnection of SIM cards in August and September 2015, said Maroleng.

The company had disconnected the SIM cards but is “engaged” with the regulator around the timing of the disconnections, said Maroleng. Nigeria started its SIM registration process in 2013 to ensure that mobile devices are not used for criminal activities.

The fine has hit MTN hard with its shares having declined about 20% since news of the fine broke last week Monday.

On November 2 the Johannesburg Stock Exchange briefly suspended trade in MTN. The JSE is further investigating the mobile network for the way it announced the fine last week, and for trades which occurred just prior to the announcement.

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