These are not the best of times for various agencies in the marketing communications industry. They are grappling with paucity of funds to execute marketing campaigns. Besides, the ongoing regulatory crisis facing telecoms giant MTN Nigeria may have added a scary dimension to agencies’worries, ADEDEJI ADEMIGBUJI reports.
Sometime last year, two fast-rising Public Relations (PR) agencies, Brooks and Blake and DKK Group, won MTN Nigeria’s PR business. That was after a competitive pitch. Both firms popped champagne to celebrate their hard-won victory after upstaging the incumbents, MarketingMix Ideas Limited and XLR8. While the former handled MTN’s brand management for 11 years, the latter was in charge of the corporate communications part of the account for seven years.
Brooks and Blake and DKK Group were not the only PR agencies considered lucky to have grabbed the juicy account. Other agencies, such as Media Perspective, DDB Lagos, and TownCriers, handling advertising creative, media buying and planning, and experiential marketing business for the South African telecoms firm also counted themselves lucky. For them, it was the best thing to happen to them in a recession.
Their joy was understandable. It is common knowledge among industry operators and observers that MTN is the biggest spender on marketing communications in West Africa. The telco has remained in the top spend league for over a decade. For instance, a report produced yearly by mediaReach OMD, which listed the top 10 advertisers in communication and telecoms sector last year, credited MTN with spending N13.5 billion. It was the highest figure for that year.
However, the excitement that greeted the emergence of the new PR agencies for MTN appears to have been short-lived. This was sequel to the regulatory problem facing the telecoms giant as well as Dino Melaye’s allegation of repatriation of funds without Certificate of Capital Importation (CCI) .
At first, sources close to the agencies said MTN’s efforts to pay N1.04 trillion fine imposed on it by the Nigerian Communications Commission (NCC) for violating subscriber identity module (SIM) card registration rules had been taking a huge toll on the agencies handling its marketing communications business.
MTN Nigeria, the largest mobile network operator in the country, had been fined N1.04 trillion ($5.2billion) for failing to disconnect subscribers with unregistered and incomplete SIM cards within the deadline for doing so. It was the heaviest fine ever in the industry.
According to the NCC, MTN Nigeria was fined for allegedly undermining efforts by the Federal Government to tackle security challenges and the war on terror and allied crimes.
The snag, however, is that since the regulatory battle between NCC and MTN began, the marketing communications industry has never been the same. It was learnt from reliable industry sources, for instance, that agencies handling MTN PR account had been losing sleep.
As a result, budget for jobs already approved and implemented are said to have been slashed by as much as 40 per cent. “Some of the jobs have been implemented and sometimes we get bank loan at about 30 per cent interest rate to finance the projects. So, the 40 per cent budget slash is taking a toll on our businesses. Paying salaries is so hard. If you are handling MTN account, you have to set up a unit, employ more experts because the volume of the job is huge,” the source said.
But the affected firms are not folding their arms. It was learnt that the agencies are exploring a collective approach to dealing with the development to remain in business.
For instance, the Media Independent Association of Nigeria (MIPAN), which sub-sector of the marketing communications industry accounts for almost 70 per cent of billings, is said to have taken up the matter.
MIPAN recently organised a session tagged: Business outlook for 2017: Economic recession and business growth.
During the event, where the executives of Association of Advertising Agencies of Nigeria (AAAN), Outdoor Advertising Agencies of Nigeria (OAAN), among others, were present, experts barred their minds on the far-reaching consequences of the fine on MTN on the industry.
Financial Derivatives Company Limited, Managing Director/Chief Executive, Mr. Bismarck Rewane, warned against the implication of the continued ‘harassment’ of MTN Nigeria by the government, adding that this could discourage inflow of foreign investments.
“Since we are harassing MTN, nobody is going to invest. Hounding MTN is not a good thing, because it is sending a negative signal. We need to ensure that we send the right signal to encourage investment rather than discourage investors,” Rewane cautioned.
Rewane, an economist, noted that considering MTN’s huge contribution to the economy, especially in advertising spends and taxes, the government should look for a soft-landing for the telco.
He pointed out that the Information and Communications Technology (ICT) industry remained very vibrant, despite the contraction in the economy.
He said MTN contributed 12.6 per cent to the nation’s Gross Domestic Product (GDP) and recorded a 1.32 per cent growth in the second quarter of the year. The sector also expanded by 4.7 per cent in the first quarter.
Rewane affirmed that the third quarter report of the economy, which is expected to be out soon, may not hold any good news for the country. He, however, projected that growth would return within the next 18 months.
Contrary to Rewane’s insinuation about the harrassment of MTN, the NCC has consistently said it was not interested in running down MTN or any teco for that matter, but making them to comply with the rules operating in their host country.
“MTN had some 52million pre-registered/improperly registered SIM cards active on its network. It was, along with other telos, given an ultimatum to deactivate the SIMs but it refused to comply with the directive while others did. Decision on the SIM deactivation was reached at a meeting that had the representatives of the National Security Adviser (NSA), Group Captain, Ibikunle Daramola, Director, State Security Services (DSS), Mr. Godwin Ometu, the immediate past NCC Executive Vice Chairman, Dr Eugene Juwah, Executive Commissioner, Technical Services, Engr. Ubale Maska and representatives of MTN, Globacom, Etisalat, Visafone , Airtel and others. Such SIM cards were being used to commit crimes such as kidnap for-ransom. So MTN knew about the implications of its actions,,” an NCC source said.
Also, MediaReachOMD founder, Mr. George Thorpe, warned the government against battling with MTN Nigeria, saying that the economy needed to encourage as many investors as possible.
However, the heavy fine on MTN is not the only pain in the neck of the telecoms firm, which, unfortunately, is rubbing off on agencies in the marketing communications industry.
A public analyst, Mr. Tunji Andrews, while speaking on a radio programme on NigerianInfo 99.3 “Cross Fire”, insisted that MTN has not committed any crime in respect of the CCI.
He said: “The issue that we had or they brought was that this particular telecoms firm did not get the CCI. They didn’t get it within 24 hours. Not getting the CCI doesn’t mean that you steal money and you take money out. It means when you take your money out or bring it in, you have to have that certificate.
“What most people don’t understand is that CCI doesn’t only track cash, it also tracks assets because it means capital importation. So, whether it is machinery or whatever it is, as long as it is capital brought into the country and you are taking it out, it must be registered. It generally must be 24 hours, but in the case of asset it is always difficult to do in 24hours and we know it still happens till now.”
Speaking on a popular Television Continental (TVC) Business Morning Show, a Financial Management Consultant, Mr. Bisi Ogunwale, said the furore generated by the alleged regulatory discrepancies involving MTN might send warning signals to potential and willing investors in the economy.
However, despite facing numerous regulatory challenges in the year, MTN has emerged the best and most-valuable brand in Nigeria. This is in the Top 50 Brands survey released last week in which the telecoms brand came first with a rating of 90.1, beating Coca-Cola Nigeria’s 84.7 and GTBank’s 81.8.
The model that was used in arriving at this result included consumer’s familiarity with the brand, quality element a brand possesses, market/category leadership, innovation, spread, and Corporate Social Responsibility (CSR) initiatives.
But, MTN has suspended dividends payout from Nigeria, where it runs the biggest wireless phone network which generates a third of its yearly sales. The company reported a slight fall in third-quarter user numbers due to a weaker showing in South Africa, where it vies for market share with Vodacom and Cell companies.
MTN is not the only telecoms firm facing NCC’s regulatory scrutiny. Last week, the telco, Airtel, Etisalat and Glo reportedly were seriously warned over unsolicited telemarketing. Specifically, they were warned for failing to comply with the directive on the Do Not Disturb (DND) order issued on April 20, this year.
