MTN: Sailing against the wind

It is no longer news that MTN came to Nigeria at a very crucial time of telecommunications needs of Nigerians. Basking in the experience it brought from its South Africa base, the telecommunications company took the industry by storm and it created a resounding relevance for itself in the Nigeria market. In this piece, BODE ADEWUMI traces the emergence of the company, successes and travails.

ONE might say without mincing words that one of the success stories that came with the liberalisation of the Nigerian telecommunications industry was the arrival of MTN Nigeria in 2001. The government of former President Olusegun Obasanjo announced the deregulation of the telecoms industry in 1999, shortly after he took over the reins of leadership after 20 years of military rule.

It is instructive that many countries in Africa including smaller countries like Republic of Benin had embraced the Global System of Mobile Communications (GSM) as early as the mid-90s, but not so in Nigeria. The military government under the late General Sani  Abacha did not deem it fit to expedite action on this critical sector of the economy until his death. The government of Abdusalami Abubakar was too short lived to thinker with the idea and so could be excused.

But Obasanjo was quick to spot the potential inherent in the sector especially with the advent of the GSM across the world. Moreover, the national carrier at the time, the Nigerian Telecommunications Limited (NITEL), had become almost problematic to the government and Nigerians in general.

However, many investors were wary of investing in the country because of the instability in the government structure, especially the turbulence that occurred before the transition to civil rule. Therefore, when MTN came into Nigeria in 2001, it had to tread softly because of some of the factors that were mentioned earlier. But then they must have realised the potentialities in investing in the Nigerian economy and in the telecoms sector which was going through the storms at that material time.

And so MTN came from South Africa and ECONET (now Airtel) from Zimbabwe in 2001 when they both had to pay a hefty sum of $285 million dollars each to obtain two of the four GSM licenses on offer then. It must be stated that the problems with the two operators, particularly MTN, started at this time and so also the successes it recorded so far in the sector.

Coming with a big experience from South Africa, the MTN Group’s home base, the company came with innovations that attracted people and subscribers patronised the network. Despite a tax holiday for the two pioneer operators, their offerings and services were deemed to be too expensive as only those in the upper class could afford these services.

For instance, a SIM card was sold as high as between N25, 000 and N40, 000; the same went for mobile handsets, although this could not be blamed entirely on them. Even at that, the price of a recharge card was as high as N1, 500 with 15 days validity period. It failed initially to introduce flexible and lower denomination recharge cards.  What it meant was that the company was on an aggressive financial drive to recoup its investment. Nigerians were miffed but the novel GSM and what it offered were too good to be ignored.

It came to a head when the company insisted that there was nothing as Per Second Billing (PSB) as it was charging at N50 per minute. But all these came to an abrupt end when Globacom was licensed to commence operation in 2003 and it immediately blew up the lies of MTN and ECONET. Nigerians were quick to lay the blame on the doorstep of MTN because it had more subscribers owing to its massive expansion initiative. MTN was forced to introduce PSB, reduced price of SIM cards and many more. Nigerians couldn’t dump it easily because its expansion programme continued unabated even after the arrival of Glo and Mtel.

The race continued as the operators began to expand and if not for Globacom, it would have been a one horse race because ECONET at a stage began to show cracks, just as Mtel, being a government-owned company was also facing bureaucratic hard times.

Despite all these, kudos must still be given to MTN Nigeria for the leadership role it played in the earlier days of GSM with its attendant value added services like Internet services, mobile services, SMS and other innovations that were moving the economy and Nigerians forward.

MTN’s overriding mission is perhaps, to be a catalyst for Nigeria’s economic growth and development, helping to unleash Nigeria’s strong developmental potential not only through the provision of world class communications but also through innovative and sustainable corporate social responsibility initiatives.

But many Nigerians remained sceptical thinking that the company was not sincere in many things it was doing in the sector.

This was outside the fact that thousands of Nigerians were in its employ as well as developing the sector with innovative ideas. Some even insinuated that the company was planning to relocate to South Africa with all the proceeds it had garnered in the country. But the company realised the importance of Nigeria to its investment in spite of its presence in more than 23 countries in Africa and in the Middle-East.

But the company was to add to its successes and also more troubles were to come for it on many fronts. As the company continues to grow its subscriber base with millions of customers, it is easily the leader of the pack, both in terms of voice calls and internet services among other added services

At the initial stage, the four major GSM Network providers, viz  Airtel, Glo, MTN and Etisalat (now 9mobile) were in 2012 sanctioned to the tune of N1.17 billion as a fine for poor service delivery. This was against the complaints of the telcos who had all along been advocating better working environment in terms of adequate supply of electricity, easier RoWs and eradication of multiple taxations among many others.

Then came the big one in 2015 when the company was handed down a $5.2 billion fine by the Nigerian Communications Commission (NCC). The commission exercised section 20(1) of the Telephone Subscribers regulation (TSR) law on MTN, for not meeting the deadline set up by the Mobile network operators (MNOs) for disconnecting the Subscribers Identification Modules (SIMs) with improper registration. The compliance audit carried out by the NCC on MTN network revealed unregistered 5.2 million customer’s lines un-deactivated. This led to the NCC fining MTN with the sum of $1000 for each unregistered SIM, which amounted to $5.2 billion.

What followed was major resignations among the top echelon of the organisation including the Chief Executive Officer, Mr Sifiso Dabengwa, the Head of Nigeria Operation, Mr Michael Ikpoki and the Head of Corporate Affairs, Mr  Akinwale Goodluck being replaced with Mr Phuthuma Nhleko, Mr Ferdi Moolman and Mrs Amina Oyagbola as the new Chairman, Managing Director and Head of Corporate and Regulation respectively.

The new management deployed a diplomatic measure between the government of South Africa and its Nigerian counterpart to ameliorate the burden of the liabilities from the fine. This action brought about the reduction of the liability to $3.2 billion.

This was followed by another allegation of a $2 billion tax demand against MTN. The dispute started in 2018 when Mr Abubakar Malami, the Attorney General and Minister of Justice, said MTN owed the equivalent of $2 billion in unpaid duties and taxes dating between 2007 and 2017. The MTN group denied the liability. The allegation was later dropped.

Also in August 2018,  the CBN told MTN to repatriate $8.1 billion that it had taken out of the country with what it called ‘irregular capital importation certificates issued over the period 2007 to 2015’. That was settled in early 2019 for a nominal $53 million.

Then the battle to list on the Nigerian Stock Exchange (NSE) came up which the company had been avoiding for a while. Interestingly, the part to MTN’s decision to list on the NSE started in 2015 when the Nigerian Communications Commission (NCC) fined the telecoms company $5.2 billion (₦1.04 trillion as at then) for failing to disconnect unregistered lines, which was later, reduced after negotiations. Part of the terms for the reduction of the penalty was that MTN Nigeria would be listed on the Nigerian stock exchange.

Therefore, MTN Nigeria finally listed on the Nigerian Stock Exchange in May 2019. As anticipated, it was a turning point for the NSE, which has seen a steady decline in its all share index earlier on. MTN Nigeria’s $5 billion listing made it the second largest company on the Nigeria’s Stock Exchange, behind only the $8.3 billion market cap of Dangote Cement, owned by Aliko Dangote, Africa’s richest man. The listing also came on the heels of the MTN’s positive financial results in Nigeria, its largest market.

What all these translate into is that MTN Nigeria, in spite of all the vicissitudes, has emerged even stronger considering that as of October this year, the company has recorded a 13.9 per cent boost in its total revenue for Q3 2020, as it recorded total revenue of N975.76 billion this year, up from N856.549 billion recorded in the corresponding period last year. This is according to its updated financials available on the Nigerian Stock Exchange Market.

Key metrics, which impacted the Q3 2020 figures posted by the firm include, mobile subscribers increased by 3.9 million to 75 million. Active data users increased by 1.7 million to 30.7 million, while service revenue increased by 13.9 per cent to N973.8 billion. Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) grew by 9.1 per cent to N497.9 billion. This is the story of MTN Nigeria to date.

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