By SAMSON AKINTARO
Over the years, the relationship between the Nigerian telecom regulator, Nigerian Communications Commission (NCC) and the telecom operators could best be described as cordial. This is not to say that there had not been few cases of skirmishes between the two parties, but whenever such occurred, they had always reached a meeting point where the rift is resolved amicably, either through the operator paying imposed fine or the regulator granting pardon.
Obviously, the mutual understanding between the regulator and the regulated had kept the Nigerian telecom industry growing and blossoming to such a level that it became the first reference point in Africa as a successful telecom market and also ranked as one of the fastest growing telecom markets in the world. Year on year, the subscription figures has kept climbing and even amidst the challenges of Right of Ways, multiple taxation and poor infrastructures, the operators are raking in huge revenues year on year. And the telecom subscribers though have to contend with poor service; still enjoy the luxury of mobile communication that the telcos have brought.
But then, things cannot remain the same for life, which explained why the regulator had to come up with the idea of Subscriber Identification Module (SIM) registration and made it mandatory for all telcos to get their subscribers registered in 2011 and a compulsory onward registration of new SIMs before activation. For one, in the face of increasing insecurity in the country, the country could not afford not to get its mobile users identified as is the case in other climes for security purpose.
With this exercise it was no longer business as usual for the telcos and even the mobile subscribers. Situation where one buys a SIM and started using immediately became outlawed. And with that came a new regulation stating the mandates for all telcos and the penalties for their failure to abide by the rules. The NCC’s ‘Registration of Telephone Subscriber Regulations, 2011′ states among others that “any licensee who fails to capture, register, deregister or transmit the details of any individual or corporate subscribers to the Central Database as specified in these Regulations or as may be stipulated from time to time by the Commission is liable to a penalty of N200,000.00 for each subscription medium.”
Upon this regulation being in place as far back as far back as 2011, many were shocked that even as at August 2015, many unregistered SIMs were still being activated by the telcos. And it was based on this discovery that the regulator issued another seven-day ultimatum to Global System for Mobile Communication (GSM) and other network providers to deactivate all pre-registered Subscribers Identification Module (SIM) cards or face sanctions.
The telecoms regulatory body gave the ultimatum after a high-level security meeting between the office of the National Security Adviser (NSA), Department of State Service (DSS), the network operators and the NCC in Abuja. At the meeting, the representatives of the NSA, Group Captain, Ibikunle Daramola; DSS, Mr Godwin Ometu; the immediate past NCC executive vice chairman, Dr Eugene Juwah; executive commissioner, technical services, Engr. Ubale Maska and representatives of MTN, Globacom, Etisalat, Visafone, Airtel and others were said to be present.
A statement by the commission’s director of public affairs, Mr Tony Ojobo, said the directive was sequel to seemingly intractable security situation in the country and crimes committed against members of the public either by kidnappers, terrorists, robbers and threats to lives, through the use of such unregistered SIM cards across all the networks. The statement read in part: “The meeting resolved that henceforth, all registrations must conform to the data dictionary, technical specifications on finger prints and facial images and the business rule agreed by all stakeholders; all registration records must be validated before sending to the commission; thus eliminating all invalid records that does not conform new registrations and indicate same in the monthly reports sent to commission. It was also resolved that operators will be held liable for cases for cases of pre-registered SIMs.” The statement noted that while more than 120 million SIM cards have been registered and transmitted to the central database by the operators, about 45 per cent of the total numbers of registered SIMs, as at September 2014, were deemed invalid, adding that less than 30 per cent of the invalid records has been resubmitted for correction till date.
With that directive, all unregistered or improperly registered SIMs were expected to be deactivated by the telcos by mid-August 2015. Incidentally, that was not to be as the industry woke up to the news of a landmark N1.4 trillion fine against MTN over its non-compliance with the regulator’s directive to de-active unregistered SIMs. According to the regulator, MTN had failed to disconnect around 5.1 million subscribers from its network for not having been registered as of September 2015, as prescribed by the regulatory agency. The total sum is based on a fine of N200, 000 for each unregistered subscriber.
The fine which is the largest in the history of telecom infringements however, has redefined the relationships between telecommunications operators and the regulator. And now, both the NCC and MTN at dagger drawn over the fine as the operator has dragged its regulator to court, while the regulator insisted the fine must be paid. The once cordial regulator-operator relationship has turned frosty and no one knows where or when it will end.
How Security Concerns Triggered Regulator’s Anger
At the initial stage of the SIM registration exercise, the whole idea was, more than anything else, necessitated by the increasing insecurity in the country. For the past five years, Nigeria has been facing serious security threats from the Boko Haram, a terrorists group with mostly operations in northern Nigeria, and kidnappers who most make ransom demands using anonymous cell phones.
With tackling insecurity in mind, it is believed that if all SIM cards are registered, perpetrators of kidnapping and terrorism could be easily traced by security agents through their mobile lines, as biometrics and other details of every phone user were expected to be captured and warehoused in a database maintained by the NCC.
However, the kidnap of a former Secretary to the Federal Government of Nigeria and Chairman of the Social Democratic Party (SDP), Chief Olu Falae, may have stoked the most anger within government circles leading to the landmark fine handed down to MTN Nigeria, the leading mobile operator in the country, by the NCC.
Chief Falae, a former minister of finance in Gen. Ibrahim Babangida’s administration, was kidnapped on his 77th birthday, on September 21, 2015 at Ilado, along Igbatoro road, in Akure, the capital city of Ondo State, in a manner that threw the country into shock in the rising spade of cases of kidnaps, insurgencies and the likes, thereby making nonsense of the well-meant efforts by government to keep the insurgents and criminals at bay. It was a national embarrassment that caused vexation in the bellies of security agencies and President Muhammadu Buhari, who has vowed to wipe out insecurity and insurgency in the country.
To prove their seriousness at combating the kidnappers and bringing them to book, the Nigeria Police Force, led by the Inspector-General, Solomon Arase, took the battle to the kidnappers den, and, in an equally unprecedented move, the kidnappers were arrested. In a short time they were singing out how they shared the ransom-money of N5 million, which was paid to secure Chief Falae’s release.
It was learnt however that the kidnappers’ mobile phone number which was specifically used during the process of arranging and kidnapping Chief Falae, as well as receiving the ransom, was an MTN Nigeria line. But the crux of the matter, which revved the angst of government and incurred the wrath of the regulator with the unprecedented fine, was the discovery that the mobile line was an unregistered MTN Nigeria subscriber identification module (SIM) card.
It is on record that NCC had, in efforts to help security agencies combat insurgency, kidnapping, militancy, arm robbery and sundry crimes in the country, issued repeated notices to all existing mobile operators to disconnect all unregistered SIM cards in the country. Once security agencies found the Chief Olu Falae’s kidnappers’ mobile line used for the heinous and dastardly crime to be an MTN Nigeria SIM, it was left to the NCC to investigate who the line was registered or assigned to. Upon investigation however, it was discovered to be one of the five million MTN Nigeria unregistered lines, which ought to have since been disconnected in line with the regulator’s directives.
It was further learnt that before the kidnap of Chief Falae, the NCC had made several attempts to gain access to the MTN Nigeria switches at various points, to ascertain in practical terms, its registered and/or unregistered subscribers so as to be sure of the numbers that must be disconnected, all to no avail, as the mobile operator was said to have prevented NCC’s monitoring officials gaining access.
Saying other operators allowed the Commission’s officials access except MTN Nigeria, a source said this might have exposed the operator “even if not intended to be so” to the ugly turnout of events, as the regulator and security agencies were rightly angered and appalled that the kidnappers’ mobile number was unregistered by the operator and therefore, there was no record of the owner of the SIM in the operator’s network after call record/log was made available.
‘Our Stand’ – NCC
Even in the midst of negotiations, which brought some executives of the MTN Group to Nigeria to dialogue with the regulator, the NCC had made its point clear that indeed, MTN Nigeria broke its rules and must pay for it according to laid down regulation. The Commission, while explaining the rationale behind the huge fine had justified its action base on existing rules, which it said all operators were aware of.
The Commission in a statement by its Director, Public Affairs, Mr. Tony Ojobo, had explained thus: “Following the sanctions placed on MTN Nigeria by the Nigerian Communications Commission (NCC), members of the public have expressed diverse interest as to what actually transpired. “The fine was a result of violation of Section 20(1) of the Registration of Telephone Subscribers Regulation of 2011.
“Section 20 (1) of Registration of Telephone Subscribers Regulations 2011 states that: ‘Any licensee who activates or fails to deactivate a subscription medium in violation of any provision of these Regulations is liable to a penalty of N200,000.00 for each unregistered but activated subscription medium.”
“The fine of N1.04 trillion on MTN Nigeria by the Nigerian Communications Commission (NCC) was done in the interest of the public, which has been at the receiving end of security challenges. “Consequent upon the overwhelming evidence of non-compliance, and obvious disregard to the rule of engagement by MTN, the NCC had no choice but to impose the sanctions.
“MTN, in a letter of November 2, 2015 admitted the infraction and pleaded for leniency. The Commission has acknowledged this and is looking into their plea without any prejudice to the fine. The fine remains but the appeal and other engagements with MTN may affect the payment deadline.”
NCC also gave the details of how MTN had committed infractions and its neglect of warnings. It added: “The fine that was imposed on MTN was the second within two months after the operators were given a seven-day ultimatum to deactivate all unregistered and improperly registered Subscriber Identification Module (SIM) Cards. While others complied, MTN did not. “On August 4, 2015, at a meeting of all the representatives of the Mobile Network Operators (MNO) with NCC, major security challenges through preregistered, unregistered and improperly registered SIM Cards topped the agenda after which Operators were given the ultimatum to deactivate such within seven days.
“On August 14, 2015, three days after the ultimatum expired, NCC carried out a network audit, while other Operators complied with the directive, to deactivate the improperly registered SIM Cards, MTN showed no sign of compliance at all. “Please recall that four (4) Operators; MTN, Airtel, Globacom and Etisalat, were sanctioned in August for non compliance of the directive to deactivate the improperly registered SIM Cards. MTN got a fine of N102.2million, Globacom N7.4million, Etisalat N7million and Airtel N3.8Million fine. Others complied while MTN flouted the fine. “Based on the report of the compliance Audit Team, an Enforcement Team, which visited MTN from September 2 – 4, 2015 wherein MTN admitted that the Team confirmed that 5.2million improperly registered SIM Cards were still left active on their network; hence, a contravention of the Regulations was established.
“Consistent with the Commission’s enforcement process, MTN was by a letter dated October 5, 2015, given notice to state why it should not be sanctioned in line with the Regulations for failure to deactivate improperly registered SIM Cards that were found to be active at the time of enforcement team’s visit of September 15, 2015.
“On October 19, 2015, the Commission received and reviewed MTN’s response and found no convincing evidence why it should not be sanctioned for the established violations. “Accordingly, by a letter dated October 20, 2015, the Commission conveyed appropriate sanctions to MTN in accordance with Regulations 20(1) of the Telephone Subscribers Registration Regulation 2011 to pay the Sum of N200,000.00 only for each of the 5.2million improperly registered SIM Cards.”
The statement said all stakeholders in the industry were part of the registration of telephone subscribers. It said: “In order to ensure proper identification of telephone subscribers with their biometric data and in line with international best practice, the Commission came up with a framework for the registration of telephone subscribers in Nigeria. “The above Regulations were developed with the full participation of all key industry Stakeholders including all Mobile Network Operators (MNO) in 2011. “The Commission on its part has a statutory responsibility to monitor and enforce compliance to the rules, more so, when national security is at stake.
The statement explained that, National interest is paramount because when lives are lost they cannot be replaced. “As a responsible Regulator, the NCC will not stand by and watch Rules and Regulations for Engagement being flouted by any Operator. “The Commission has adopted a smart regulation in its oversight function in the industry; hence it has always weighed the implications of sanctions that is why it had to place the appropriate sanction accordingly.” The NCC statement further said that sanctions were the last resort after all overtures failed but that it did not in any way undermine Industry Standards and the interest of Investors.
Dialogue Yields Reduction
From the day the fine was announced, the MTN Group had indicated its readiness to negotiate with the regulator and that culminated in a diplomatic move that brought the top echelons of the company from South Africa to Nigeria. In a letter to shareholders early November 2015 the MTN Group wrote: “Shareholders are advised that the Executive Chairman of the Company, Mr. Phuthuma Nhleko, has personally met with the Nigerian authorities to continue the ongoing discussions with them regarding the fine of N200,000 for each unregistered subscriber (“the fine”), the equivalent of US$5.2 billion imposed on MTN Nigeria by the Nigerian Communications Commission (“NCC”). “These discussions include matters of non-compliance and the remedial measures that may have to be adopted to address this,” the statement added.
According to the MTN statement, although the NCC “set a deadline for payment of the fine by Monday, 16 November 2015, shareholders are advised that the Nigerian authorities have, without prejudice, agreed that the imposed fine will not be payable until the negotiations have been concluded.”
The first result of the discussions was the NCC’s decision to extend the deadline for payment from November 16 to December 31, which gave room for further negotiation. However, What could be termed as fruit of the weeks of negotiation between the MTN leadership and leadership of the NCC soon came out with the announcement of a reduction in the fine by early December 2015, this came after about 5 weeks of negotiation. The MTN Group in a statement titled: ‘The Nigerian Communications Commission (NCC) reduces imposed fine to US$3.4 billion equivalent and further cautionary announcement,’ stated: “MTN has received a formal letter dated 2 December 2015 from the NCC informing the Company that, after considering the Company’s request, it has taken the decision to reduce the fine on the MTN Nigerian business from the original N1,040,000,000,000 (One Trillion, Forty Billion Naira) to N674 Billion Naira which has to be paid by 31 December 2015.”
Curiously, however, MTN issued another statement on December 4, saying it received yet another letter from the NCC dated December 3, stating that the fine was reduced by 25 per cent and not 35 per cent as the regulator had previously informed the company. This means the fine to be paid now stands at N780 billion. But the MTN Group, in the statement, said it was carefully considering the NCC letter and would make a response appropriately:
The Company is carefully considering the NCC’s reply, however the Executive Chairman Phuthuma Nhleko will immediately and urgently re-engage with the Nigerian Authorities before responding formally, as it is essential for the Company to follow due process to ensure the best outcome for the Company, its stakeholders and the Nigerian Authorities and accordingly all factors having a bearing on the situation will be thoroughly and carefully considered before the Company arrives at a final decision.