MTN's race against time: Nigeria extends deadline, but not by much
- The Nigerian regulator has extended the deadline for all mobile operators in Nigeria to link the ID numbers of their subscribers to their SIM cards on a national database.
- MTN now has has until the end of the month to confirm the ID numbers of between 20 million to 30 million clients.
- The new SIM card ultimatum is the latest in a long line of battles that have bloodied MTN in Nigeria.
- For more stories, go to www.BusinessInsider.co.za.
MTN in Nigeria now has a couple more weeks to update and link the SIM cards of up to 30 million of its users with their ID numbers, after the telecoms regulator extended the deadline for the registration process.
The Nigerian Communications Commission previously gave mobile operators a tight deadline of 31 December - and threatened to cut off users who aren't verified, and to strip mobile companies of their licences if they don't comply.
The new deadline is 9 February for subscribers without a NIN (National Identification Number) number and 19 January for users with a NIN. Mobile operators campaigned for a six-month extension.
Bloomberg reports that while Nigeria has 196 million active numbers, only between 40 million to 60 million Nigerians have identity numbers. MTN recently received a licence to register Nigerians on the NIN database, which will give them identity numbers as part of the process.
Earlier this month the national communications regulator, at the behest of the country’s communications minister Isa Ali Ibrahim, ordered all mobile operators in the country to immediately halt the sale, registration and activation of new SIM cards while it embarks on an industry wide audit to ensure that mobile operators comply with the country’s new SIM card registration requirements.
Ferdi Moolman, MTN’s risk officer, estimates that the company must link the SIM cards and ID numbers of between 20 million and 30 million on the country’s database, the National Identification Management Commission database (NIMC).
Mazen Mroue, MTN Nigeria’s chief operating officer, says the company was this week granted a new NINs registration licence to allow it to begin capturing and validating customers.
The company has also placed orders for about 14,000 devices to enrol and capture NINs. The devices should assist in registering 448,000 registration on a working day. Even then, it will take months to link all its clients in Nigeria.
The new SIM card ultimatum is the latest in a long line of battles that have bloodied MTN in Nigeria, since the company entered that market almost two decades ago. It has faced massive problems with the authorities along the way:
- Five years ago, it was slapped with a fine of more than $5 billion for having failed to disconnect 5 million SIM cards that belonged to unregistered users. The fine was later reduced to $1.7 billion.
- In 2018, the Nigerian central bank accused MTN Nigeria of illegally paying $8.1 billion in dividends to its parent company in SA between 2007 and 2015 – and ordered it to pay back the money. In the end, MTN made a "resolution payment" of $53 million.
- A few months later, Nigeria’s attorney general, issued MTN with a $2 billion tax bill related to the payment of foreign suppliers. This was later withdrawn.
In exchange for various agreements, MTN has made large investment pledges and listed on the Nigerian stock exchange last year.
Peter Takeandesa, senior investment analyst at Mergence Investment Managers, was alarmed by the regulator’s harsh language, and he expects it indicates that MTN could face another fine soon.
“After they’ve done this audit that they’re doing, are they going to come up with fines again like they did last time in 2015? They’ve done it before and the regulations are in place to fine anyone in breach of that,” he said.
“You’d hope that MTN closed many of the loopholes that existed," said Zaid Paruk, portfolio manager and analyst at Aeon Investment management. He says the company already has many corporate governance initiatives in place to focus on the "increased risk in the regulatory environment".
Meanwhile, MTN doesn't expect the latest challenge will affect its income from Nigeria, which contributes a third of its group profit, for now. But it could have a long-term impact on growth.
“Recharge activity and other services are still available and have not been impacted, so the momentum to achieve double digit service revenue growth for this year remains intact. Beyond this, a more stringent registration process will likely mean the rate of subscriber additions will decelerate,” Moolman said.
Receive a daily news upda on your cellphone. Or get the best of our site emailed to you.
Go to the Business Insider front page for more stories.