MTN Group CEO Sifiso Dabengwa has arrived in Nigeria to negotiate with the Federal Government over the N1.04trn fine imposed on the telecom firm by the Nigerian Communications Commission (NCC) ) for violating its directive on SIM deactivation.
Dabengwa, who led a powerful team from South Africa, is currently in Abuja where he will be engaging Nigerian authorities concerning the company’s fine.
Dabengwa, who served as CEO of MTN Nigeria between 2004 and 2006, is expected to meet with the NCC Executive Vice Chairman, Umaru Garba Danbatta, National Security Adviser, Major-General Babagana Monguno (rtd.), and Chief of Staff to the President, Alhaji Abba Kyari, to negotiate a soft landing for the company.
“Any material developments in these engagements will be communicated to shareholders,” a statement from the company issued monday stated.
MTN has until November 16 to pay the fine, which relates to the timing of the disconnection of 5.1 million subscribers and is based on a charge of N200,000 for each unregistered customer not disconnected from its network.
Trading in MTN shares resumed yesterday on the Johannesburg Stock Exchange (JSE) after the telecoms firm issued a cautionary statement on its shares. JSE had temporarily suspended trading in MTN Group shares after the company’s stock tumbled last week following a $5.2bn fine by the Nigerian Communications Commission (NCC) for violating its directive on SIM deactivation.
JSE Director, Issuer Regulation, John Burke, had stated that “The JSE has halted all trading on MTN Group Limited. Trading will resume as soon as MTN Group Limited issued a SENS announcement.”
In a statement later, MTN Group Executive for Corporate Affairs, Chris Maroleng, said: “We take note of the JSE’s decision to suspend MTN’s shares.”
Trading in the shares later resumed after MTN issued the cautionary statement.
After declining by about 20 per cent last week, the company’s shares dipped further by about eight per cent monday.
Credit rating agencies Fitch and Moody’s have lowered MTN’s credit rating outlook to “negative” from “stable”, citing the regulatory fine. Standard & Poor’s also lowered the group to “BBB-” from “BBB” and placed it on credit watch with negative implications.
Nigeria is MTN’s biggest market with 62 million customers as of September. The stock has declined more than a fifth since news of the penalty was reported a week ago, and is trading at about three-year lows.
The fine was announced early last Monday but MTN informed shareholders only later that day, saying the fine was related to the “timing” of the disconnection of subscribers.
Under South African capital markets rules, companies are required to immediately warn shareholders of any materially price-sensitive information.
However, its stock began to tumble last week following a $5.2 billion (N1.04trn) fine by Nigerian regulators for not disconnecting up to five million unregistered SIM cards.
Giving reasons for the fine, NCC had said the commission had consistently engaged Mobile Network Operators, (MNOs) to strictly adhere to the regulations and its business rules in the registration of their subscribers. But despite all of these several engagements, the commission said it confirmed various cases of violations of the regulations and sanctioned appropriately.
“Given the recent security concerns in the country, government held several meetings with MNOs on the need to ensure only properly registered SIM cards are active on their networks,” NCC had said while announcing the fine slammed on the firm.