How Chief Olu Falae's kidnap helped to trigger N1 trillion fine against MTN

When Nigeria failed to trace owners of SIM cards used by kidnappers of a prominent
politician in September, it was the final straw for the west African country after what it
called a string of violations by telecoms firm, MTN, according to Reuters.

Africa's biggest mobile phone company was given a $5.2 billion (about N1 trillion)
penalty by the Nigerian Communications Commission (NCC) last month after the South
African company failed to cut off users with unregistered SIM cards from its network.
Nigeria has been pushing industry players to verify the identity of their subscribers on
worries that unregistered SIM cards were being used for criminal activity in a country
facing Islamic militant group, Boko Haram's insurgency.
The fine, which is based on a $1,000 (N200,000) for each phone line MTN failed to cut
off, has left investors, including its biggest shareholder, wondering how the company
failed to comply with the law that carried that such a heavy penalty.
"We are equally concerned that MTN seems to have failed to anticipate the fine and
take preventative actions," said the Public Investment Corporation, MTN biggest
shareholder with about 16.6 per cent stake.
The NCC raised the prospect of a penalty on MTN Group and other players in Africa's
biggest economy at least two months before imposing the fine on the Johannesburg-
based company.
But the final straw for MTN, according to an NCC source, came a month after the high
profile kidnapping of former Nigerian Finance Minister and runner-up candidate in the
1999 presidential election, Olu Falae, on September 21.
The company said this week that it was in talks with Nigerian authorities about a penalty
which would wipe out more than two years of annual profit.
When the NCC imposed the penalty MTN had been talking with the regulator about the
exact number of people that needed to be disconnected from the network, two sources
familiar with the matter.
In a meeting with the state security agency and all operators on August 4, the NCC had
asked MTN to cut off between 10 and 18.6 million users but MTN told the regulator
that it only had 5.2 million users whose identity could not be verified, an NCC source
said.
"MTN was under the presumption that it can carry on business as usual because it was
still in discussion with the regulators," the source said.
MTN has said the fine related to the "timing of the disconnection" of subscribers and is
expected to argue that it could not cut off any subscribers by the deadline date
because it had been in talks with regulator.
By September, other operators, which include United Arab Emirates' Etisalat and India's
Bharti Airtel, had fully verified their users and cut off those they could not verify their
identity while MTN had made a "partial attempt," the NCC said.
Then, on October 22, four weeks after the abduction of Falae and about two months
after the August deadline, the NCC, on advice from the state security agency, decided
to impose the fine but only made it public four days later.
"These SIM cards with invalid registrations pose a grave security risk to the country,"
the NCC memo said. "The recent kidnapping of the former finance minister Chief Olu
Falae is one example of this risk."

Source : Nigerian Tribune