Tag: MTN

MTN Nigeria offered its top employees shares to prevent them from going to rival firms, a former chief executive of the company, Mr. Adrian Wood, told the National Industrial Court of Nigeria (NICN) sitting in Lagos, yesterday.

Wood, an Australian, was invited from the United Kingdom, to testify before Justice Oyejoju Oyewumi, as Claimant Witness 5 in a suit by Paul Odunewu, an ex-Network Group Operations Manager in MTN against the company.

Wood said Odunewu increased MTN’s base stations from 100 to 2,500 in three years and was one of 50 top employees offered the company’s shares.

Odunewu accused the company of withholding his entitlements, including a share option worth $13.14 million (about N2.1 billion) and is demanding N100 million in damages for alleged wrongful termination of his contract.

Led in testimony by Kemi Balogun (SAN), Wood said top employees like Odunewu enabled the company’s profits to surpass MTN Group, South Africa, in three years, almost catching up in turnover.

Within the same period, MTN achieved a 50 per cent market share and became the No.1 operator in Nigeria, leading it to offer share options to such employees.

He said: “Paul Odunewu was important, a key recruit. He was responsible for all network planning. When he started, MTN Nigeria had 100 base stations. But three years later, it had approximately 2,500.

“He was the senior manager responsible for all assets of the company and maintaining their performance. He was effectively a deputy executive of the company.”

Wood said to keep such top employees, MTN Nigeria initiated a retention policy of leadership development and succession, under which those with potential were promoted within the MTN group offered shares.

He said: “Odunewu was nominated as a key employee and was offered a share option plan being devised at that time.

“By 2004, he was one of 50 senior employees chosen to participate in MTN Nigeria’s share offer plan.”

MTN Group Limited, South Africa; MTN Nigeria and MTN International, Mauritius are defendants in the suit.

An objection by defence counsel, Mrs. Ayo Obe, to the tender of the policy document was discountenanced by Justice Oyewumi after the claimant’s counsel pointed out that justice would only be done when all facts were laid before the court.

Under cross examination by defence counsel, Wood said there was a board resolution in early 2002 approving the share option scheme.

He added: “In December 2001, MTN Nigeria set aside 5-10 per cent of the company’s assets to managers, 35 per cent of which were share offers.

“In some cases the offers were in writing, in others they were verbal.”

Justice Oyewumi adjourned the matter till March 23 and 24 for defendants to open their case.

The Nigerian Communications Commission (NCC) yesterday extended to Friday the deadline given to MTN to pay a $5.2billion fine.

The commission also said it sanctioned the telecommunications giant based on security reasons following its failure  to deactivate 5.2million unregistered SIM cards.

It said it acted in the national interest and to protect innocent Nigerians from falling victim of terrorists using unregistered SIM cards .

According to a top shot in NCC, the deadline was extended to  Friday for more consultations.

The source said: “Although the deadline expired on Monday, we have extended it to Friday to enable all parties to conclude ongoing talks.

“Definitely by the end of the week(Friday), we will issue another statement. We hope that we would have finalised ongoing discussions in the interest of all parties. Our official position will be known by the end of the week.

“We decided not to be rigid about the deadline to allow for the conclusion of talks.”

The NCC, in  a statement by its Director, Public Affairs, Mr. Tony Ojobo, broke its silence on why MTN was sanctioned.

It said the sanctions became inevitable because national security was  at stake.

The NCC statement said: “Following the sanctions placed on MTN Nigeria by the Nigerian Communications Commission (NCC), members of the public have expressed diverse interest as to what actually transpired.

“The fine was a result of violation of Section 20(1) of the Registration of Telephone Subscribers Regulation of 2011.

“Section 20 (1) of Registration of Telephone Subscribers Regulations 2011 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.”

“The fine of N1.04trillion on MTN Nigeria by the Nigerian Communications Commission (NCC) was done in the interest of the public, which has been at the receiving end of security challenges.

“Consequent upon the overwhelming evidence of non-compliance, and obvious disregard to the rule of engagement by MTN, the NCC had no choice but to impose the sanctions.

“MTN, in a letter of November 2, 2015 admitted the infraction and pleaded for leniency.  The Commission has acknowledged this and is looking into their plea without any prejudice to the fine. The fine remains but the appeal and other engagements with MTN may affect the payment deadline.”

NCC also gave the details of how MTN had committed infractions and its neglect of warnings.

It added: “The fine that was imposed on MTN was the second within two months after the operators were given a seven-day ultimatum to deactivate all unregistered and improperly registered Subscriber Identification Module (SIM) Cards. While others complied, MTN did not.

“On August 4, 2015, at a meeting of all the representatives of the Mobile Network Operators (MNO) with NCC, major security challenges through preregistered, unregistered and improperly registered SIM Cards topped the agenda after which Operators were given the ultimatum to deactivate such within seven days.

“On August 14, 2015, three days after the ultimatum expired, NCC carried out a network audit, while other Operators complied with the directive, to deactivate the improperly registered SIM Cards, MTN showed no sign of compliance at all.

“Please recall that four (4) Operators; MTN, Airtel, Globacom and Etisalat, were sanctioned in August for non compliance of the directive to deactivate the improperly registered SIM Cards. MTN got a fine of N102.2million, Globacom N7.4million, Etisalat N7million and Airtel N3.8Million fine.  Others complied while MTN flouted the fine.

“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 5.2million improperly registered SIM Cards were still left active on their network; hence, a contravention of the Regulations was established.

“Consistent with the Commission’s enforcement process, MTN was by a letter dated October 5, 2015, given notice to state why it should not be sanctioned in line with the Regulations for failure to deactivate improperly registered SIM Cards that were found to be active at the time of enforcement team’s visit of September 15, 2015.

“On October 19, 2015, the Commission received and reviewed MTN’s response and found no convincing evidence why it should not be sanctioned for the established violations.

“Accordingly, by a letter dated October 20, 2015, the Commission conveyed appropriate sanctions to MTN in accordance with Regulations 20(1) of the Telephone Subscribers Registration Regulation 2011 to pay the Sum of N200,000.00 only for each of the 5.2million improperly registered SIM Cards.”

The statement  said all stakeholders in the industry were part of the registration of telephone subscribers.

It said: “In order to ensure proper identification of telephone subscribers with their biometric data and in line with international best practice, the Commission came up with a framework for the registration of telephone subscribers in Nigeria.  (Nigerian Communications Commission Registration of Telephone Subscribers Regulations 2011).

“The above Regulations were developed with the full participation of all key industry Stakeholders including all Mobile Network Operators (MNO) in 2011.

“The Commission on its part has a statutory responsibility to monitor and enforce compliance to the rules. More so, when national security is at stake.

The statement explained that, National interest is paramount because when lives are lost they cannot be replaced.

“As a responsible Regulator, the NCC will not stand by and watch Rules and Regulations for Engagement being flouted by any Operator.

“The Commission has adopted a smart regulation in its oversight function in the industry, hence it has always weighed the implications of sanctions that is why it had to place the appropriate sanction accordingly.”

The NCC statement further said that sanctions are the last resort after all overtures fail but this does not in any way undermine Industry Standards and the interest of Investors.

Nigeria does not want MTN to quit the country because of the  $5.2 billion fine imposed last month, Communications Minister  Adebayo Shittu said yesterday, suggesting the African mobile phone giant may have found a sympathetic ear in its bid to reduce the penalty.

The deadline for paying is  Monday.

There was no confirmation  yesterday whether the South Africa-listed company can, or will, pay the fine  although MTN Group’s Executive Chairman Phuthuma Nhleko was said to have visited  Nigeria during the week over the matter.

The fine was imposed by the Nigerian Communications Commission for MTN’s failure to cut off 5.2 million unregistered SIM cards.

“A judgment has been given, as it were, and the period for enforcement has not yet passed,”  Shittu, who was sworn in on Wednesday, told Reuters in an interview.

The fine – if fully enforced – amounts to more than the past to years of profit for MTN in its biggest market, but Shittu said it should not jeopardise the company’s future in Nigeria.

“Nobody wants MTN to die. Nobody wants MTN to shut down,” he said.

The fine is based on $1,000 per outstanding unregistered SIM card, as stipulated by the  telecommunications laws, although most analysts expect some sort of a reduction.

Nigeria accounts for 37 percent of revenues for MTN, which operates in more than 20 countries in Africa and the Middle East. Since the announcement of the fine, its shares have lost nearly 25 percent of their value.

The company has sent top executives to Abuja to try to negotiate a way out, and Shittu stressed the ball remained in MTN’s court. When asked to comment on the progress of the talks, he said there was “nothing before me”.

“If any new thing would happen, there must be initiative from concerned quarters,” he said. “It is up to MTN.”

The fine has the potential to escalate into a trade or diplomatic spat with South Africa although Pretoria has so far played down the risk of wider fallout.

When asked about the consequences of non-payment, Shittu said the law would be followed. He did not give details but insisted: “We don’t want them to leave.”

Nigeria has been pushing telecom operators to verify the identity of subscribers due to concerns that unregistered SIM cards are being used for criminal activity or even by Boko Haram militants insurgency in the Northeast.

Phuthuma Nhleko was named executive chairman of MTN for a period of up to six months after Sifiso Dabengwa stepped down as CEO with immediate effect  last Monday.

MTN has said it is continuing talks with the authorities in Nigeria over the fine.