When the Nigerian telecommunications regulator, the National Communications Commission (NCC), imposed a N1.23 trillion fine on MTN, it came as a big bang. But there was evidence that the regulator did its due diligence!
The question on most lips is: “Are we not throwing away the baby with the bath water?” In an online survey conducted by BRIU, the 500 respondents drawn from across the country acknowledged that the penalty MTN has to face was much too high.
The shock associated with the fine lies in the amount MTN has to pay. N1.04 trillion is 22 percent of the Federal Government’s 2014 budget. It amounts to 34 percent of MTN’s projected revenue for 2015. And dwarfs the total amount MTN has paid in taxes since inception by 25 percent.
While acknowledging that MTN erred, 65 percent of respondents to an online survey conducted by BRIU called for a reduction in the fine, especially because of the strategic position of MTN in the Nigerian economy.
From its inception in 2001 till June 2015, MTN Nigeria has paid over N1.3 trillion in taxes and levies to government. The company also supports Nigeria in various sectors including health care, sports, schools, Nollywood and the music industry and has been a source of foreign direct investment. In the past 14 years, MTN has invested over $15 billion in network infrastructure in Nigeria.
Specifically, MTN has paid N83.02 billion on duties on equipment it has brought into the country since inception; it has paid N9.5 billion on duties on stock, and VAT of N273.1 billion. MTN has paid N62.23 billion in education taxes while its employees have paid N28.91 billion in taxes over the period.
Apart from taxes and levies, the company has contributed to the employment of hundreds of Nigerians (at least 95 percent of its employees are Nigerians).
Also, a fourth of fibre optic cables in the country are owned by the MTN Network. (With 64 million subscribers, some rough estimates have it that MTN alone contributes about 4 percent of Nigeria’s GDP.)
Therefore, to impose a fine which is equivalent to 34 percent of its 2015 revenue may inevitably force the company to cut cost on several aspects of its operation. In this regard, Corporate Social Responsibility and expansion plans may be at risk. Indeed, the NCC has all the high cards, and needs to use its power with great circumspection.
And there are examples which the regulator can follow. In 2010, following the Gulf of Mexico oil disaster, BP was fined by the US government based on the amount of oil that gushed into the gulf as a result of a fatal blowout of its well.
The case was set to be the costliest to date for BP, which had already spent billions on cleanup costs, and settling thousands of claims arising from the 2010 disaster. The oil company got a break from the Justice Department. The NCC must not throw out the baby with the bathwater.
Historically, the catchphrase “don’t throw the baby out with the bathwater” is an idiomatic expression and a concept used to suggest an avoidable error in which something good is eliminated when trying to get rid of something bad.
A slightly different explanation suggests that this flexible catchphrase has to do with discarding the essential while retaining the superfluous because of excessive zeal.
The progression of events leading to the imposition of the fine on MTN suggests that the decision was neither politically motivated nor calculated to tarnish MTN’s image.
While Johannesburg-based MTN is in talks with Nigerian authorities over the penalty imposed on it for failing to disconnect customers with unregistered SIM cards or having incomplete registration data. It is great that Nigerian regulators are becoming stricter at enforcing rules which are set by them; however, these rules must be enforced with a human face.
Ejiro Obodo
