MTN has been doing well as a brand and as a business and even till now, is believed would keep its head above water as the recent issue of fine seems to be bearing down not only on the firm’s pockets but on its shares, plummeting down by a massive 12% in just one day following a hefty fine imposed by Nigeria’s communications governing body on the telecomms giant.
In 2012, the National Communications Commission (NCC) announced that everyone get their various SIM cards and telephone lines registered and this was to be implemented by the various telecoms companies and service providers. With various deadlines set and deadline shifts, up to the final deadline, customers were asked to either register their lines or risk getting disconnected from the device.
Some of the users on the MTN network did not get registered before the deadline due to one reason or the other and MTN on its part did not disconnect these subscribers from its network as planned, thereby facing a fine of #200,000 per subscribers who were supposed to be de-registered but weren’t. This fine by NCC accrued up to a total $5.2 billion dollars and MTN has already released a statement to that effect to its stakeholders, giving the hope that they would try to get into some negotiations as regards the matter with NCC.
The fine, according to Bloomberg, caused MTN to suffer a major setback in the stock market, resulting to a 12% loss in value on Monday.
“Events like this, even if the final outcome is a lesser fine, still highlight the unmanageable risk of doing business in highly regulated industries in emerging markets,” James Faircliff, a spokesman for Tower Capital Management, said. Tower is a major shareholder in MTN.
“Our negative investment thesis still remains,” Faircliff added. “We feel that uncomfortable relations with the Nigerian regulator could pose added risk to the pending license renewals in that country. Telcos and resources companies can often get a raw deal.”