I MAKE this submission because the Nigerian Communications Commission, NCC, is trying to railroad the government of President Muhammed Buhari into a major policy blunder that could set Nigeria back by many decades!

It all has to do with some frightening developments on the whopping $5.2 billion (N1.04 trillion) fine that NCC slammed on Nigeria’s telecoms operator, MTN, in October 2015, for failing to deactivate about five million unregistered subscribers on its network. The trend of events since then has become quite alarming!

They All Sinned

Before visiting NCC’s performance on this matter, which is inflicting a worsening damage on the nation, let us clear the air! If there was a “grave” sin (such as any security implications of the long years of non-compliance) then MTN was not the only sinner! All the operators would have been guilty! According to reports, NCC originally gave the operators a deadline of June 2013, to deactivate ALL their unregistered subscribers; but as at September 2014 (over one year after the deadline) NONE of them had complied. But instead of being decisive, NCC continued to extend the deadline – to October 2014, to July 2015, to August 11, 2015, and so on. Reports also suggest that even after the August deadline, NCC continued to hold discussions with ALL the network operators, about compliance.

Indeed, the greatest guilt could go to NCC, for being rather casual in enforcing the deactivation. As a good regulator, NCC should have known that the operators would naturally delay the deactivation for as long as they could get away with it, because deactivation would cost them the revenues from those subscribers. The appropriate regulatory response was to ensure that no operator profited from non-compliance. If for example, 20% of an operator’s subscribers were unregistered, and NCC simply imposed a 20% fine on the operator’s total revenue, with a progressively increasing percentage penalty as the non-compliance continued, it would have triggered a rush by the operators to comply! But NCC seemed not to be decisive, which would have encouraged the laxity of the operators!

Regulatory Arbitrariness

More seriously, NCC has projected Nigeria as a nation of regulatory arbitrariness! How on earth did it arrive at the titanic rate of N200,000 (or $1,000) for every unregistered subscriber that was not deactivated? If according to reports, the average revenue per Nigerian subscriber is only $5, what impression are we creating to the global investing public with such a draconian arbitrariness? Was NCC effectively saying to the operators, “You have already invested, there is nothing you can do now”?

What has particularly baffled the global community is that NCC should have, as a responsible regulator, considered the implication of a humongous $5.2 billion fine on MTN! If the fine exceeded MTN’s net asset value of about US$900 million, it was effectively making the company technically insolvent – for an offence that should even have been handled routinely! The global community can’t help being perplexed about the regulator’s goal! To kill MTN? As Nigeria’s Mohammed Haruna pointed out, “Penalties are meaningful and sensible only if they serve as deterrence to the culprit and to others. They are useless, or worse still, they amount to cutting one’s nose to spite one’s face, if they serve only to kill the culprit and risk discouraging investors at home and abroad from betting on Nigeria’s future.” Besides, there was no precedence for such a whopping fine in Nigeria’s telecoms history, which prompted Simon Kolawole of Thisday to ponder: “If poor service quality to 120 million subscribers attracts a fine of N5m, failure to disconnect five million subscribers should not attract N1.04trillion”! A good regulator is predictable, not erratic. Regulatory arbitrariness is the worst thing global investors want to face!

Again, look at how we went about granting discounts to MTN on the fine. First, NCC announced a 35% reduction. Even before analysts could figure out how it arrived at 35%, it reversed itself, and changed the discount to 25%! To a perplexed global community, it was all just like playing God to a defenseless foreign investor!

Enormous International Damage

All these have been disastrous to our nation’s investment prospects! From the highly influential Forbes we have got “a huge red flag”! For David Lerche of Avior Capital Markets, “The incident has brought to light the high level of risk when doing business in Africa”. Forbes, still in another piece: “a state-sanctioned mugging … almost 40 times larger than the next-biggest fine imposed anywhere in the world on a telecoms operator”!

Bank of America Merrill Lynch: “… government is under pressure to fill the revenue gap from lower oil prices by any means necessary; this outsize fine represents 20% of forecast expenditure and over 60% of forecast revenues … this year.” Mark Bohlund, of London’s Bloomberg Intelligence: “it reinforces the impression that the Buhari administration does not have the political clout to cut back spending nor any creative ideas to take the country forward and stimulate other sectors of the economy”. Pete Guest: “it has added volume to an already noisy chorus of negative views on the country”! Who then can now come to invest? Is NCC not killing Nigeria?

Worsening all these are reports suggesting that NCC might have even decoyed MTN into defaulting. For example, if NCC continued to hold discussions on compliance with ALL the operators almost right until its hammer fell on MTN, when then exactly did the other operators (Glo, Etisalat and Airtell) achieve full compliance that saved them from attracting any fines whatsoever! By how many days did they beat MTN to compliance, to justify such a whopping fine on MTN alone, without any fine whatsoever on any of them? Again by not responsibly clearing all such insinuations, NCC has created the impression of playing God!

Playing God

Indeed, worsening this worldwide bafflement has been NCC’s arrogant silence, as if Nigeria owes nobody any explanations for what it does to foreign investors! What on earth has NCC been waiting for, before explaining to a bewildered global investing public, the logic behind its N200,000 rate, 35% discount, the change to 25% discount, and its real goal? Even if NCC realises that what it has done is an indefensible global embarrassment, its loud silence has had the effect of flaunting just how defenseless foreign investors can be in our country – which is further flamed by screaming headlines such as “Reps Want MTN Fine Doubled To $10 billion”, “Governors Insist MTN Must Pay $5b Fine”, and so on!

But perhaps the greatest harm of all was our national reaction to MTN’s decision to go to court. One of the most important essentials of foreign investors is the protection of their investments in a country. They want to know that they will be able to enforce their rights. But when MTN decided to go to court, perhaps to challenge the unreasonableness of the fine, we seemed to have unleashed state institutions on the hapless firm, which perhaps caused MTN to hurriedly withdraw the case! According to the respected Segun Adeniyi of Thisday, who seemed to write with inside knowledge of the thinking at NCC “Now that the company has decided to go to court after admitting its guilt in writing to the presidency … I have it on good authority that so many other things have come up about MTN operations in Nigeria and the manner in which the company might actually have been breaking our laws, especially on remittances and taxation. These are issues that the relevant authorities are now looking into since the company wants to fight. But far more significant is that the South African authorities may need to wade in before MTN commits suicide in Nigeria…I hope the authorities at MTN, especially the top Nigerian shareholders, are aware of the implications of what they are doing.” Incredible! Is NCC making Nigeria a nation where it is “suicidal” for foreign investors to seek judicial protection? Segun’s warning is all over the internet, and investors worldwide are perusing it (over and over) up to this moment! What damage!

How can President Buhari be pushing so hard, criss-crossing the globe for foreign investors, while an agency of his government appears at the same time to be telling the investors that the worst of fate awaits them if they come? If NCC single-handedly extinguishes the nation’s investment prospects, what are its plans for the millions of Nigerian youths, who are very angry because there are no jobs – as well as the hundreds of thousands more that are graduating every year to join them?

Our urgent national interests demand that the Minister of Communications, Adebayo Shittu, Vice President Yemi Osinbajo, and even Mr President himself promptly step in and halt the mounting damage, before it becomes irremediable!

Finally, let me emphasis that I have no relationship whatsoever with MTN, nor with anybody representing them. I am simply alarmed by what appears as our spiraling catalogue of regulatory blunders.

Mr. Gabriel Zowam , a reform & governance expert, wrote from zowam@yahoo.com

Source:- http://www.vanguardngr.com/2016/05/nigeria-mtn-bungled-regulation/