As at the time MTN said it was still deliberating on ‘final decision’, many were already speculating that the company had agreed to pay the fine, but the Group released a shocker by announcing the decision to take its regulator to court. And that opened a new chapter in a case that had lingered for almost three months.
In a statement issued at the MTN headquarters in Johannesburg, South Africa, December 17, the company wrote: “Further to the SENS (stock exchange news service) announcement issued by the Company on 4 December 2015, shareholders are advised that all factors having a bearing on the matter have been thoroughly and carefully considered including a review of the circumstances leading to the fine and the subsequent letters received from the Nigerian Communications Commission (NCC).
“MTN Nigeria acting on legal advice has resolved that the manner of the imposition of the fine and the quantum thereof is not in accordance with the NCC’s powers under the Nigerian Communications Act and therefore there are valid grounds upon which to challenge the fine. “Accordingly MTN has followed due process and has instructed its lawyers to proceed with an action in the Federal High Court in Lagos seeking the appropriate reliefs.”
Writing further, the company stated: “MTN is advised that in the current circumstances in line with the lis pendens rule (pending legal action) the parties are enjoined to restrain from taking further action until the matter is finally determined. This is consistent with previous judicial decisions in Nigeria.”
Essentially, this move is to ensure that NCC does not take any action even as the December 31 deadline it set for the company to pay the fine approaches. However, MTN continued: “Notwithstanding this action the Company will continue to engage with the Nigerian Authorities to try and ensure an amicable resolution in the best interests of the Company, its stakeholders and the Nigerian Authorities.”
Suit Filed
Making good its plan to go to court, MTN has filed a suit at a Federal High Court, Lagos challenging the $3.9billion sanction imposed on it by the Nigeria Communications Commission (NCC). Sued alongside the NCC is the Attorney General of the Federation (AGF), and Minister of Justice.
The firm is urging the court to quash the fine which NCC had imposed on them last October for allegedly failing to disconnect unregistered subscribers. MTN through its team of lawyers comprising Chief Wole Olanipekun, Tanimola Molajo, A.B, Mahmoud , Dr. Gbolahan Elias, Oladipo Okpeseyi, Prof. Fabian Ajogwu, Dr. Oladapo Olanipekun (all senior advocates) through an originating summons, is challenging the powers of NCC to impose such a fine on it.
The telecoms company argued that on the basis that NCC being a regulator, cannot assume all the functions of the state on its own, considering the fact that they made the regulation, prescribed the penalty and imposed the fine, payable to the commission and not the federal government. The firm also alleged that it was not afforded its constitutional right of fair hearing before a court of competent jurisdiction and more importantly, it had not been found guilty of any offence that will warrant it to pay such outrageous fine.
It contended that the sanction imposed on it by NCC was within 24 hours of its written submission on the disconnection exercise and the impractical nature of the NCC deadline. Stating that the deadline of seven days to disconnect 5.2 million subscribers was grossly inadequate and impracticable, the telecoms company said the deadline to disconnect 5,200,000 subscribers was unfair and ran contrary to the requirement to give adequate notice to the subscribers and all operators.
It accused the regulatory agency of acting as a legislator, executor, accuser, prosecutor, judge and beneficiary of the penalty imposed and that the sanction (N200,000 per SIM) imposed on it was excessive.
But with the legal action taken against its regulator, there are indications that the NCC might get tougher against MTN this year. It was reported that the Commission felt ’embarrassed’ that the operator could still go to court after it had agreed that it indeed flouted the rules and there had been a ‘gentleman’ agreement for the reduced payment.
Casualties of the Landmark Fine
Certainly, it is not over until it is over, but the fine saga has claimed casualties already with top officials of the company losing their job and as the battle continues, the number of casualties cannot be ascertained yet. Speculations are rife that MTN management might have to lay off some of its staff members here in Nigeria as a fall out of the huge fine, though such is yet to be announced officially. The biggest casualties, however, are those in the management cadre who have had to resign involuntarily.
Sifiso Dabengwa
The first victim of the battle in MTN over the Nigeria fine was a big one, as a matter of fact, the biggest, as the drama moved to the company’s boardroom, claiming already the job of the Group President and Chief Executive Officer, Mr. Sifiso Dabengwa, who on November 9 2015.
In throwing in the towel, Dabengwa, who stepped in as CEO of MTN Nigeria after Adrian Wood’s tenure came to an end and worked here for a considerable period of time, wrote: “Due to the most unfortunate prevailing circumstances occurring at MTN Nigeria, I, in the interest of the company and its shareholders, have tendered my resignation with immediate effect.”
Dabengwa, BB.Sc. (Elect. Eng.), MBA, EDP served as the Chief Executive Officer and President of MTN Group Ltd. from March 31, 2011 to November 9, 2015. Mr. Dabengwa served as Chief Operating Officer of MTN Group Ltd. until March 31, 2011. He served as Managing Director of MTN SA of MTN Group Ltd. Mr. Dabengwa served as Chief Operating Officer-South Africa of MTN Nigeria Communications Ltd. He served as Chief Executive Officer of -MTN Nigeria Communications Ltd. since November 1, 2004 and also served as its Managing Director. He was responsible to develop and implement strategic direction, ensure profitable growth and meet required performance targets. He served as Group Chief Operating Officer of MTN Group Ltd. until November 2004. His major achievements have been to maintain and improve the MTN’s group’s market position, despite increased competition and demand for resources. Prior to MTN, he served several years at Eskom, where as a Member of Eskom’s Management Board, where Mr. Dabengwa was responsible for all of its distribution operations, including sales, customer service, marketing, engineering and technology. At Eskom, he was also responsible for the planning and implementation of the national electrification programme, one of the most successful projects of the Reconstruction and Development Plan. He serves as a Director of MTN Nigeria Communications Limited. He serves as Director of Leaf, e-Bucks, MTN International, MTN Network Operator and MTN Service Provider. He serves as a Non-Executive Director of Peermont Global Limited. Mr. Dabengwa served as an Executive Director of MTN Group Ltd. from October 1, 2001 to November 9, 2015. He served as an Independent Non-Executive Director of Impala Platinum Holdings Ltd. from January 1, 2004 to November 10, 2004. Mr. Dabengwa holds B.Sc. in Electrical Engineering, MBA and EDP.
The statement issued from the MTN Group headquarters in South Africa at 6 a.m. November 9, 2015 to announce Dabenga’s resignation also informed that the then Non-Executive Chairman, of the Group, Mr. Phuthuma Nhleko had been appointed Executive Chairman in a temporary capacity. Nhleko will act in that capacity for a maximum period of 6 months while the company identifies a successor for Mr. Dabengwa, the company explained in the statement.
Nhleko is no stranger to the business as he served as Non-executive Director and Chairman of MTN from July 2001 until June 2002 and thereafter as an executive director, Group President and CEO until March 2011. He has subsequently chaired the Group in a Non-executive capacity for the past two and a half years (29 May 2013).
“I will assume responsibility as Executive Chairman for the next 6 months as I proactively deal with the Nigerian regulator and will continue to work with them in addressing the issues around unregistered subscribers as a matter of urgency,” commented Nhleko. To ensure compliance with King III, Mr. Alan van Biljon will continue to serve as the Lead Independent Director on the MTN board of directors (“MTN Board”) whilst Mr. Nhleko takes over executive responsibility. “Together with the MTN Board, my second priority will be to find an appropriate Chief Executive Officer to take MTN forward. I will then revert to my Non-executive Chairman role,” concluded Nhleko.
Michael Ikpoki
After 12 years of lucrative and worthwhile operations in Nigeria even if often times in tumultuous and inclement circumstances, Africa’s leading telecommunications brand, MTN, whose ownership is South African, finally gave validation to a unit that has lifted its profitability ratings over the years, by handing the reins of leadership in the country to an indigene. MTN Nigeria, the Group’s cash-cow gets its first Nigerian Chief Executive Officer as Michael Ikpoki, who took over on July 24, 2013. Besides being a mark of final avowal to the boisterous and leadership position of MTN Nigeria in the Group’s overall operations, the naming of the Nigerian to lead the Nigerian subsidiary proves the MTN Group’s confidence in, and endorsement of its Nigerian employees as not only capable of running the affairs of the subsidiary; it also further steels the company’s commitment to the Nigerian economy.
Unfortunately, Ikpoki had just two years and few months to spend in that position as the tsunamic wind of the landmark blew him out of office. Announcing Ikpoki’s resignation as a fall out of the fine tussle, the MTN Group also announced the appointment of Ferdi Moolman as his replacement.
Ikpoki’s appointment
Michael Ikpoki was the CEO of MTN Ghana when he was named as the new Chief Executive Officer of MTN Nigeria in July 2013. Ikpoki replaced Brett Goschen, who took on the role of MTN Group Chief Financial Officer and Executive Financial Director on the Board.
Ikpoki was appointed CEO of MTN Ghana in April 2011 after successfully running MTN Nigeria’s Sales and Distribution channel as its Executive from 2006. He joined MTN in 2001 as a Regulatory Advisor after a six-year stint with the Nigerian Communications Commission’s legal division.
A seasoned business executive, Michael is well read, with an academic profile that includes General Management Programme at Harvard Business School; Sales, from INSEAD Business School; Finance and Analytics, from Lagos Business School and LLB from Rivers State University of Science and Technology.
How MTN Nigeria Reacted to Ikpoki’s Appointment
Generally, the industry was agog a Nigerian was, for the first time, appointed as the CEO of the largest telecommunication company in the country. And by the same token, MTN Nigeria released a statement saying that the appointment of Michael Ikpoki as the first Nigerian CEO of the company demonstrated the strength of MTN’s talent development programme.
The company’s Corporate Services Executive then, Akinwale Goodluck, stated that “Michael Ikpoki’s appointment lends credence to the company’s principle of building local talent and underscores the strength of our leadership development strategy and leadership succession pool.”
According to him, “This is indeed a strong reflection of the MTN talent management creed; Management’s commitment to it and the quality and abundance of talent in MTN Nigeria, having regard to the status of MTN Nigeria as the biggest operating company within the MTN Group.”
Goodluck revealed that Ikpoki started his career in telecoms with the Nigerian Communications Commission (NCC). After six years with the NCC, he joined MTN Nigeria as a Regulatory Advisor in 2001, rising steadily through the ranks and receiving the quality of training, capacity building and exposure that are inherent in the company’s employee value proposition.
Michael Ikpoki became General Manager, Regulatory Affairs in 2004. Two years later, in 2006, he was appointed General Manager, Sales and Distribution and in 2007, the Sales and Distribution Executive for MTN Nigeria. His appointment as the Chief Executive Officer of MTN Ghana in April 2011 made him the First Nigerian in the MTN Group to attain this height.
He was however, not the only one. Indeed, only a few months after Ikpoki was appointed CEO of MTN Ghana, another Nigerian, Karl Toriola, was also appointed CEO of MTN Cameroun.
Several other Nigerians have since gone on to hold strategic positions across various MTN operations.
Akinwale Goodluck
He could aptly be described as the Face of MTN Nigeria, for wherever MTN is involved Wale Goodluck would be there to speak about his company, most times, representing the Chief Executive Officer. His knowledge of the industry and the company he worked for made him an authority on issues of the telecom industry. Unfortunately, his stint at MTN came to an abrupt end with the fine saga. Wale Goodluck’s resignation as MTN’s Corporate Services Executive was announced alongside that of the CEO, Ikpoki.
A complete gentleman and one who understands the industry so well, Goodluck was the legal backbone of the foremost telecoms operator. The director of the MTN Foundation had primary oversight for the reputational risk and stakeholder management for MTN Nigeria. As such he supervised the entire Corporate Services Division which consists of Regulatory &Government Relations, Commercial/Legal, Company Secretariat, Corporate Affairs, and the MTN Foundation Limited by Guarantee.
Goodluck Joined MTN Nigeria in December 2001 as a Commercial Legal Advisor and thereafter he held positions of increasing responsibility. In his capacity of General Manager, Commercial Legal, he was the General Counsel of the company with responsibility for the management of contractual obligations, litigation management and dispute resolution. All commercial transactions were under his purview.
Subsequently, he was appointed General Manager, Regulatory Affairs, with primary responsibility for regulatory compliance, licence obligations, regulatory risk management, government relations, legislative monitoring, industry relations and business support. Before joining MTN, Goodluck worked at Nigeria’s pioneer investment bank, NAL Merchant Bank where he acquired considerable expertise in legal advisory services, corporate finance and financial services. He thereafter joined the services of The Law Union, a foremost legal firm where he was in charge of the Corporate and Commercial Law Group.
Goodluck attended the prestigious Kings College Lagos and thereafter obtained a bachelor’s degree in Law from the Lagos State University. He was called to the Nigerian Bar in 1990. He has attended several executive management courses in corporate finance and telecommunications and he is an alumnus of the Executive Development Program of the Chicago School of Business and the Harvard Business School. Goodluck is an acknowledged authority in the legal and regulatory frameworks that underpin the key sectors of the Nigerian economy making him a much sought after speaker at local and international conferences.
NCC Regulations Flouted by MTN
Below is an extract from the regulations guiding the SIM registration exercise in Nigeria titled: “The Nigerian Communications Commission Registration of Telephone Subscribers Regulations, 2011”. According to the regulation, in exercise of the powers conferred upon it by section 70 of the Nigerian Communications Act, 2003 and all other powers enabling it in that behalf, the NIGERIAN COMMUNICATIONS COMMISSION makes the following Regulations:
PART III—REGISTRATION
11.—(1) Every Licensee shall register a subscribers’ information as specified under sub-regulation (2) of this regulation.
(2) From the commencement of these Regulations, Licensees, Independent Registration Agents and Subscriber Registration Solution Providers shall in accordance with registration specifications and at no cost to the Commission or the subscriber capture, register and transmit to the Central Database the—
(a) biometrics and other personal information of subscribers who requests for the activation of the licensee’s subscription medium ; and
(b) in the case of a corporate body or other juristic person, the biometrics and other personal information of the authorised representative of the corporate body or other juristic person and the name, address and where applicable, the registration number of the juristic person issued by the Corporate Affairs Commission.
12.—(1) Upon the commencement of these Regulations, licensees shall only provide new subscribers with subscription mediums enabled for limited access to their network services and such limited access shall last for the duration of the activation window.
(2) It shall be the responsibility of a new subscriber to, at any time within the activation window, present personal information to the licensee from whom the subscription medium is obtained for registration in accordance with the requirements of these Regulations.
(3) Upon the capturing and registration of the biometrics and the personal information of a new subscriber, the licensee shall activate the subscription medium on its network service and transmit the subscriber’s information to the
13.—(1) Subject to the terms of any contractual arrangement with the Commission, the Licensees, Independent Registration Agents and Subscriber Registration Solution Providers shall carry out the capturing and registration of the biometrics and other personal information of existing subscribers within then subscribers’ registration period in accordance with the provisions of regulation 11(2) of these Regulations and the registration specifications.
(2) Where the Commission deems it necessary, it may authorise the licensees to undertake the registration of existing subscribers on their respective networks and upon the issuance of any directive authorising such registration, these Regulations shall apply with necessary modifications to such registration, as if reference to new subscriber means existing subscriber.
(3) Licensees shall support and promote the registration of existing subscribers by the Independent Registration Agents and shall promptly, upon being notified by the Commission, deactivate any subscription where the Personal Information of the Subscriber has not been entered into the Central Database by the end of the Subscriber registration period or such extensions thereof as the
Commission may prescribe.
(4) A deactivated subscription shall be reactivated upon the registration of the Biometric Information and other personal information of the relevant subscriber in accordance with the relevant provisions of these Regulations and confirmation by the Commission of the entry thereof into the Central Database.
14.—(1) Subject to the provisions to Regulation 3 of these Regulations and any instrument or guidelines issued from time to time by the Commission, a licensee who is providing roaming services in Nigeria to a subscriber of a foreign licensee shall register the personal information of such subscriber in accordance with the provisions of these Regulations before providing such subscriber with roaming services.
(2) For the purposes of sub regulation (1) of this regulation, the activation window shall be a period of 48 hours.
15.—(1) A licensee may deactivate and deregister a subscription medium upon a request by a subscriber after verification and confirmation of the subscriber information on the subscription medium.
(2) Records on any deactivation or deregistration shall be transmitted to the Central Database by the licensee in accordance with specifications issued by the Commission.
- There shall be no proxy registration of any subscription medium.
- A person may register any number of Subscription Mediums with any Licensee.
- A subscriber shall be liable for activities carried out using a Subscription Medium registered with that subscriber’s personal information.
PART IV—PENALTIES
19.—(1) 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.
(2) A licensee who activates any Subscription Medium without capturing, registering and transmitting the personal information to the Central Database commits an offence and shall on conviction be liable to a fine of N200,000.00 for each unregistered activated Subscription Medium.
20.—(1) 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.
(2) Where the Commission is satisfied that a body corporate is culpable, the Director, Chief Executive Officer, Manager or Secretary shall also be liable to pay a fine of N200,000 unless, having regard to the nature of his functions in that capacity and to all the surrounding circumstances, he proves that—(i) the offence was committed without his knowledge, consent or connivance ; and
(ii) he took all reasonable precautions and exercised due diligence to prevent the commission of the breach.
21.—(1) Any entity including licensees, independent registration agents or subscriber registration solution providers who retains, duplicates or deals with Subscriber’s information in contravention of any of the provisions of these Regulations is liable to a penalty of N200,000.00 per Subscription Medium.
(2) Where an entity, including licensees, independent registration agents or subscriber registration solution providers is found to have utilised a subscriber’s information in any business, commercial or other transactions, such entity is liable to a penalty of N1,000,000.00 per Subscription Medium.