MTN Global Markets unstable?
MTN’s two biggest markets are South Africa and Nigeria. In South Africa strikes, limited handset availability and increased smartphone usage hampered growth. In Nigeria disposable income constraints and competition threw a spanner in the works. In Iran MTN’s joint venture did well, and oddly, business in Syria boomed in spite of what is effectively a civil war. By no stretch of the imagination can one call these areas “stable”, yet perhaps it is, ironically, exactly that restlessness that encourages market growth: interpersonal contact and group communication become essential.
Naughty, risky or hubristic?
MTN was fined $5.2bn for failure to cut off unregistered users. Trade in the firm’s shares was suspended at the JSE as stock fell by as much as 12%. Africa’s largest mobile telecoms operator negotiated with authorities in Nigeria and the JSE is investigating the company over possible insider trading. MTN chief executive Sifiso Dabengwa flew to Abuja to make an attempt to have the penalty reduced. The Nigerian Communications Commission (NCC) gave MTN two weeks to pay the fine that has been imposed on MTN Nigeria for alleged non-compliance with telecommunications regulations of that country as well as allegations that MTN Management did not immediately disclose this material information to the market. The telecoms regulator in Nigeria has fined MTN in that country US$5,2bn (That amounts to more than the company’s annual revenue in Nigeria, and nearly double the entire MTN group’s net profit in 2014.) The fine relates to the timing of the disconnection of 5,1m MTN Nigeria subscribers who were disconnected in August and September 2015 and is based on a fine of about US$1 004 for each unregistered subscriber. It seems that MTN either did not disconnect customers with unregistered Sim cards, or did not do it in time.
The Public Investment Corporation, MTN largest shareholder, was concerned that the mobile operator did not anticipate the fine it faces from Nigerian authorities. Things are afoot in Nigeria: A huge drop in oil price, among them. Can we see the MTN fine in isolation, or are there other forces at play? Did nobody take the regulations seriously to begin with or is negligence the order of the day? One supposes if Volkswagen can be foolish, a major listed company like MTN can be foolish too. In contravention of the listings requirements, the MTN group withheld the information from investors.
South Africa – the gateway to?
We rather fancy ourselves as the gateway for investment in Africa, mostly for good reason. We are justifiably pleased with many export products and services. However, do we assume that we can get away with ignoring regulatory institutions? The International Court (and we are signatories to the Rome Statute) is but one recent example of our complacent assumption that we are above the law. One of our leaders (unintentionally, one hopes) said on public television that we in South Africa are subject to the “rule of flaw”. Let’s hope he is wrong.