By Etuka Sunday
The official listing of MTN on the Nigerian Stock Exchange (NSE) on Thursday, May 16, 2019 came with a lot of excitement among Nigerians, particularly existing and potential capital market investors as well as stakeholders across different sectors of the economy.
As we all are aware, the listing was never a voluntary decision by MTN Management but rather a development that came about through regulatory exigencies by the Nigerian Communications Commission (NCC), as the country’s independent regulatory authority, to ensure industry sustainability and level-playing field for all stakeholders in the industry.
While the MTN listing on the NSE brought so much joy to the investment community in the country, the landmark listing was traceable to the firm, fair forthright and transparent regulatory stance of the Commission.
As we are fully aware, the listing of MTN was part of the Settlement Agreement reached between the NCC and MTN Nigeria on June 10, 2016, following a court-ordered out-of-court settlement between the two parties and followed by a very long and painstaking negotiations, towards resolving the payment of N1.04 trillion imposed by the NCC on MTN for infraction of the NCC’sRegistration of Telephone Subscribers Regulations 2011.
However, one of the cardinal resolutions reached in the bipartite agreement between MTN and NCC in 2016 on the SIM infraction dispute, therefore, was for MTN to “undertake immediate steps to ensure the listing of its shares on the NSE as soon as commercially and legally- possible after the date of execution of this Settlement Agreement.”
Benefits of telco listing on NSE
Suffice to say that through this smart regulation and intervention by the NCC, leading to the listing of MTN on the NSE, the Commission has opened another chapter in the history of telecommunication industry by empowering Nigerians to control, own and manage one of dominant telecommunications companies in the country by owning shares in MTN Nigeria.
Addressing stakeholders at the valedictory press conference organised for the former Minister of Communications, Barr. Adebayo Shittu recently in May 2019, the Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, stated the significance of MTN listing to the Commission and Nigerians.
The EVC said: The MTN listing has helped to translate into action, an important objective of the Commission, which is to promote local investment and ownership in the telecom sector. Also, with MTN shares available in the capital market, it is expected that Nigerians will buy shares and by purchasing the shares of MTN, they will be financially empowered and be socially transformed.
In other words, we should consider the listing of telcos in Nigeria a very important milestone in translating one of the objectives of the Commission into reality, as enshrined in the Nigerian Communications Act (NCA) 2003. We have also succeeded, as a Commission, in meeting the expectation of Nigerians who had long waited for a time when big telecoms companies will be part of the nation’s capital market ecosystem.
It is instructive to state here that one of the greatest advantages of the MTN listing, facilitated by the NCC, is the implication it has on opening up the telecommunications industry for greater investment profile it gives Nigerians the opportunities to invest in publicly-quoted companies like MTN, which is the leader in the telecommunications industry in the country and easily one of the continental leaders.
In addition to benefits to the consumers, we all know that telecoms is a capital-intensive industry and of late, we found out that the inflow of Foreign Direct Investment (FDI) into the sector has not been as much as it used to be and there is so much for the telcos to still do in terms of expansion and this expansion requires capital. Industry issue bordering on poor quality of service is being partly traced to lack of sufficient infrastructure covering the entire country.
Some of the benefits of MTN listing and those of other operators to follow, therefore, is that the telco would be able to raise capital for expansion which, in turn, will bring about an improvement in the quality of service and quality of experience for the consumers of telecoms services, which is also a cardinal function of the Commission.
After MTN, the Commission expects to see other operators taking the cue and already, Airtel is in talks with capital market regulators such as the Securities and Exchange Commission (SEC) and NSE to list in Nigeria, following the telco’s London listing recently. We also expect more licensees to follow suit in future, as it is the right thing to do in big telecoms market such as Nigeria.
It is hoped that the Nigerian capital market will be kept bullish in the coming years with decisions by more operators to list on the NSE and this will help to boost infrastructure development in the industry and ultimately result in sharp improvement in service delivery across networks.
Why NCC should claim the credit?
It is gratifying that the credit for the listing of MTN Nigeria on the NSE, which has served as atonic to other telcos to follow in the same direction goes to the Nigerian Communication Commission (NCC) for its effective regulations of the country’s over $70 billion telecommunication industry.
As the country’s independent telecoms regulatory authority, the NCC essentially facilitated the landmark listing of the country’s largest telecommunications operator on NSE in line with its regulatory activities as enshrined in the Nigerian Communications Act (2003) and other subsidiary regulations to promote investment, create a level-playing field for all licensees, ensure compliance to existing telecoms laws and facilitate delivery of top-notch quality of services (QoS) to the consumers.
Let me reiterate the fact that the MTN sanction was never arbitrary; sanction for infraction committed by MTN is stipulated in the telecoms regulations to which all the telecoms operators were extensively consulted before the Regulations were put in place in line with the Commission’s culture of robust consultation before taking any policy-decision on any critical industry issue. In other words, all the licensees are fully aware of the existence of this regulations on SIM registrations.
Specifically, Sections 19 and 20 of the Registration of Telephone Subscribers Regulations 2011 prescribes the punishment for infraction by any licensee against the Regulations.
Specifically, Section 20 states that: Any licensee who activates or fails to deactivate a subscription medium in violation of any provision of these Regulations is liable to a penalty of N200, 000.00 for each unregistered but activated subscription medium.
Report of Compliance Audit Team
Subsequently and based on the report of the Compliance Audit Team, an enforcement team which visited MTN from September 2-4, 2015 wherein MTN admitted that the Team confirmed that 5.2 million improperly-registered SIM cards were still active on its network; hence, a contravention of the Regulations was established.
Accordingly, by a letter dated October 20, 2015, the Commission conveyed appropriate sanctions to MTN in accordance with Section 20 (1) of the Registration of Telephone Subscribers Regulations 2011, to pay the sum of N200, 000.00 only for each of the 5.2 million improperly-registered SIM cards and the fine amounted to N1.04 trillion.
Judicial determination and further negotiation
However, in its consideration that the fine could be inimical to the sustainability of its business, MTN sought judicial determination in December 2015 but later announced the withdrawal of its case against the NCC in February 2016 at the request of the Federal government and made an initial “goodwill” payment of N50 billion in order to create a conducive atmosphere for further negotiations.
Further to several weeks of negotiation and re-negotiation between MTN, NCC and the Federal government, they arrived at the decision for a staggered payment of N330 billion – a downward review from the initial N1.04 trillion sanction – and this was duly communicated to the House Committee and Senate Committee on Communications by June 10, 2016. MTN was, therefore, required to make the payment of the balance of N280 billion (excluding the initial ‘goodwill’ payment of N50 billion) in six tranches.
MTN began the payment structure with N30 billion into NCC’s Treasury Single Account (TSA) at the Central Bank of Nigeria (CBN) 30 days from the date of the agreement dated June 10, 2016.
Subsequently, MTN paid N30 billion on March 31, 2017; N55 billion on March 31, 2018; N55 billion on December 31, 2018 and on March 31, it paid N55 billion.
The balance and final tranche of the payment was made by May 31, 2019, in line with the staggered payment structure agreed by MTN and Nigerian government.
Despite the grim challenges arising from the N330 billion fine imposed on it, MTN Group, during a visit to the Commission in February 23, 2017, explicitly expressed its confidence in its Nigerian operations and stressed its determination to play by the rules and comply with the terms of agreements reached as resolutions regarding the fine.
The telco also acknowledge the role played by the Commission “towards an amicable resolution” of the fine.
In line with the agreement reached by the parties involved in a way to avoid decision likely to cripple business interest of the operators the Commission regulates, aside the reduction in the fine to N330 billion, it was also agreed that MTN shall apologise to Nigerians, subscribe to the compulsory observance of Code of Corporate Governance for Telecoms Industry; as well as list its shares on the NSE.
From the foregoing, it is not out of place to state that the market for investment opportunities through the MTN listing on the NSE has been made possible by the NCC and this listing signifies a confirmation of the Commission’s commitment towards delivering on the cardinal objective of ensuring industry sustainability, promoting fair competition among licensees, ensuring security of lives and ultimately promoting local investment and ownership control and management in the telecommunication industry.