BY TheCable
Calixthus Okoruwa is the chief executive officer of communications management consultancy, XLR8 (pronounced, “excelerate”). His multidisciplinary background spans sales management, social health advocacy, journalism, advertising management and public relations in industries that include pharmaceuticals, public health, print media, international air express and logistics, as well as telecommunications.
In the three years preceding his founding of XLR8, he was MTN Nigeria’s pioneer head of public relations. Having keenly followed the telecommunications industry ever since, Okoruwa spoke with TheCable on the decision of the Nigerian Communications Commission (NCC) to fine telecommunications firm MTN a sum of N1.04 trillion for failing to deactivate (within stipulated deadlines) 5.1 million unregistered subscribers:
This N1.04 trillion sanction against MTN, it is the biggest fine in the history of telecommunications in Nigeria, and it’s been said in a few places that the sanction is excessive.
That the fine is excessive is not in question. Infact, it beggars belief. I think that it is so ridiculous that the ripple effects will be with us for a long time. Investors are not likely to forget that this is one country where a regulator can summarily impose a fine to the tune of billions of dollars on a telecom operation. The entire industry should be worried because this will considerably jeopardize investor confidence for a long time to come.
It is believed in NCC and state security circles that MTN’s database contained phone numbers of kidnappers, insurgents, miscreants, armed robbers and other criminals. Would you say MTN did enough to rid its database of security threats?
A telecom company is not a security company. The role of determining security threats is that of government and its security organs. I believe that what was required of each telecom firm was to ensure that every phone user was registered. Do telecom firms have the capacity to determine the veracity of claims that customers have been made? I don’t think they do. If I bought a SIM and told the telecom firm that I live on Barack Obama Street in Kotangora, does it have any means with which to verify if this is correct? Is there a central data base of Nigerians that it can contact to verify the details of SIM registrants? In each case, you will find that the answer is no. These companies were requested to register SIMs of their customers and I believe they did this to the best of their abilities and within the constraints of an operating environment that you cannot particularly say is an easy one.
NCC says it gave MTN a 12-month grace to deactivate unregistered lines. Do you think MTN did enough to comply, within this time frame?
I believe this is better answered by MTN. I do not speak for MTN and currently have no association with MTN in any way. My reaction is strictly from the perspective of an informed third party who has been connected with Nigeria’s telecom industry for many years.
At the end of 2014, MTN Nigeria declared a revenue of N840.80 billion. How does it hope to pay a fine of N1.04 trillion?
I do not have the exact figures. But this again speaks to the ludicrousness I alluded to in your first question. Regulators need to understand and appreciate that theirs is a very delicate balancing role. They need to balance the interests of government, customers and investors.
Where this balance is tilted then something goes wrong. In this particular case where a strong negative signal has been sent to investors, the reverberations will remain for a long time and it is the customers and the government that will end up the loser. This is ironic, given that the CDMA industry has since collapsed, as you know; and given that the GSM industry itself is struggling.
At least one of the GSM companies has yet to break even. It needs more and more investment if it is to achieve this. The others still have a definite need to expand the scope of their operations and avail Nigerians of better quality of service. All the telecom companies also need to invest heavily in broadband, in literally wiring up our country. Clearly, it will be several times more difficult to access financing to do any of these now, in the face of this very tragic fine which the NCC says it has imposed on one operator.
You probably heard of the slump in MTN’s share price in the wake of the announcement. That is the way investors, including lenders and venture capitalists, react when things like this happen.
What do you think are the larger-picture implications of this fine for the telecommunications industry, seeing that MTN controls 43 percent of the market?
As I said earlier it is tragic for the market. I see it being reversed, but the damage has already been done. That anybody ever contemplated it at all, let alone announced it to the world, just beats me. I don’t understand how and why any regulator would slam such a ridiculous fine on an operator. It sends very strong negative signals to the world and will have negative implications for the ability of the overall telecom industry to raise financing in the years to come.
An industry expert says if it was his decision, he would rather pull MTN out of the Nigerian market than pay the fine. Do you see MTN adopting this option? And what are the consequences for the country, should that happen?
The fine is actually equivalent to saying “close shop”. But I don’t think this is what the regulator hoped to achieve, which is why I have said I believe that the fine will be reversed. Nobody can afford an MTN closing shop in Nigeria. The ripple effects on the overall economy including security itself would be calamitous. I strongly believe that the pronouncement will be reversed.
I’m happy that MTN and the NCC are currently engaging each other. My only regret and a big one at that, is that this was allowed to happen in the first place. Investor confidence is now badly shaken and will take some time to recover. This was very unnecessary. It is like imposing a sentence of 400 years imprisonment for a traffic offence.
Finally, do you see this landmark fine as a positive step towards firm regulation of the industry?
Not at all. With due respect to the NCC, this is making a mockery of regulation. I am very relieved that previous helmsmen at the NCC did not make rulings of this nature. If they did, we would not have had any telecom industry today. All the investors would have long taken leave of our country. Firm regulation is not only about “fines” and sanctions. Regulation must carefully balance all interests, each party is important. Without customers, there will be no investors and without investors there will be no customers. Without conducive government policy well implemented by far-sighted regulators, there will be no industry – neither customer nor investor. All of these must always be taken into cognizance. Regulation is a delicate job. It demands careful understanding of the issues but to borrow the Ben Murray-Bruce phrase, also entails the application of “common sense”. It is not rocket science.
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