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Thursday, 3 December 2015

NCC cuts MTN bill by $1.8 Billion

Nigerian authorities have reduced the $5.2 billion fine imposed on MTN Group Ltd. in October by $1.8 billion, the company said Thursday.

The Nigerian Communications Commission (NCC) informed MTN on Nov. 2 that it had reduced the fine to $3.4 billion, payable by Dec. 31. In October, the NCC fined MTN’s Nigerian unit roughly a quarter of the country’s federal budget for allegedly missing a deadline to deactivate 5.1 million unregistered SIM cards, under regulations meant to combat terrorism.

MTN, which is Africa’s largest telecommunications company with 233 million subscribers in 22 countries, said it is carefully considering the NCC’s reply, but added that Executive Chairman Phuthuma Nhleko “will immediately and urgently re-engage with the Nigerian authorities before responding formally,” to ensure the best-possible outcome for the company. MTN advised shareholders to continue to exercise caution when dealing in the company’s securities.

MTN’s former chief executive Sifiso Dabengwa resigned unexpectedly last month following accusations by Nigeria that its practices in the country had obstructed the fight against Islamist militants. For the next six months or until a successor is found, MTN is being led by Mr. Nhleko, who served as the company’s chief executive until 2011. The search for a new chief executive remains a priority and is under way, MTN said Thursday.

MTN also announced a restructuring Thursday, after reviewing its operating structure. As a result, MTN is reimplementing its former reporting structure, which breaks the company down into three regions: West and Central Africa, South and East Africa and the Middle East and North Africa.

“This revised structure and strengthened leadership will improve operational oversight and increase management capacity,” Mr. Nhleko said. “This will enable MTN to continue to realize its strategy and vision, while also ensuring we achieve high governance standards and robust risk mitigation.”

To that end, MTN said it has already made a number of senior appointments to support its new operating structure.

Jyoti Desai, former chief technology officer and chief information officer, as well as former chief information officer at MTN Nigeria and chief operating officer at MTN Irancell, has been appointed chief operating officer, reporting to Mr. Nhleko. Two regional vice presidents, reporting directly to Mr. Nhleko, have also been appointed.

On Thursday, the company also said that MTN Nigeria Chief Executive Michael Ikpoki and the head of regulatory and corporate affairs for MTN Nigeria, Akinwale Goodluck, had tendered their resignations with immediate effect.

Ferdi Moolman, former chief operating officer at MTN Irancell and chief financial officer at MTN Nigeria, will replace Mr. Ikpoki as MTN Nigeria chief executive. Amina Oyagbola has been appointed head of regulatory and corporate affairs, and retains the position of MTN Nigeria’s head of human resources, the company said.

For the 2015 financial year that closes Dec. 31, the company said it would report in line with its former operating structure: MTN Nigeria, MTN South Africa, large operating companies and small operating companies.

While little known in the U.S., MTN is a telecommunications juggernaut in Africa and has expanded across the Middle East and other regions, including in high-risk markets such as Syria and Iran.

Nigeria, with a population of 184 million, is MTN’s biggest market, and an enticing growth market for telecoms, globally. For the six months ended June 30, MTN made a net profit of 11.9 billion South African rand ($934.2 million), compared with 13.39 billion South African rand a year earlier, on revenue of 69.30 billion South African rand and 75.76 billion South African rand, respectively, the company said in August. MTN’s Nigerian operations account for about 40% of the company’s profit.

But the company’s arrival in Nigeria has coincided with the rise of terrorism, mainly by Boko Haram, an insurgency fighting to impose Islamic law. In January 2011, after a series of church bombings, the government introduced new regulations that gave telecom companies two years to collect personal data on all of their prepaid customers, including names, birthdays, religions, and addresses. The aim was to help track terrorists and criminals in the country.

That deadline ran out this year, but Nigerian authorities say that MTN kept anonymous lines open—even as the government argued that terrorists could use these numbers to conduct kidnappings and bomb attacks. The original fine of $5.2 billion was based on a fine of about $1,000 for each SIM card it said violated those rules.

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