South Africa's MTN seeks to reduce $5.2B Nigeria fine

A man speaks on a mobile phone as he walks past a MTN shop at a shopping mall south of Johannesburg. Reuters/Siphiwe Sibeko

Africa’s biggest mobile phone operator, MTN Group, is in talks with Nigerian regulators to try to reduce a $5.2 billion fine, two sources familiar with the matter said on Tuesday.

The Nigerian Communications Commission (NCC) said on Monday it had imposed the penalty on the South African-based firm for failing to disconnect users with unregistered SIM cards.

“MTN is talking to NCC with the view to revoking or reducing this fine,” one source said. “There was bit of misunderstanding around this issue.”

Another source said MTN had been in talks with NCC about the exact number of people using unregistered SIM cards when the deadline to disconnect them passed.

“MTN was under the presumption that it can carry on business as usual because it was still in discussion with the regulators,” the source said.

If it stands, the penalty will wipe out more than two years of MTN’s annual profits. Nigeria is MTN’s biggest market by subscribers.

An NCC source said the Commission’s decision was taken based on advice from Nigeria’s state security service which suspected unregistered SIM cards were being used for criminal activity.

News of the fine has pummeled MTN’s shares, which fell for a second day on Tuesday, easing 4.2 percent to 159.98 rand. That extended their losses to nearly 16 percent over the two days, wiping about 50 billion rand ($3.66 billion) from MTN’s market value.

MTN spokesman Chris Maroleng would neither confirm nor deny that the company was working on reducing the fine.

NCC initially asked MTN to disconnect between 10 and 18.6 million users but MTN told the regulator it had 5.2 million unregistered users on its network, the NCC source said.

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