MTN To Plunge N141bn On Network Expansion

MTN Nigeria is set to invest N141.05 billion ($716 million) to expand its network nationwide as part of its 2016 fiscal year, the company said in a presentation to investors published on its parent company’s website, yesterday.

The network investment will see MTN Nigeria extend third generation (3G) technology coverage to 90 per cent of Nigeria in 2017 and start a fibre-network rollout in six cities in the country.

MTN’s plan will see the rollout of 3G network population coverage from 67.23 per cent to about 90 per cent, the telco said in the presentation.

The aggressive rollout of fibre to six Nigerian cities by the end of 2016 will enhance its connectivity. In 2015, MTN Nigeria deployed 597 new 2G sites and 1,856 co-located 3G sites were added.

Its capital expenditure declined by 40.4per cent to R4. 99 billion impacted by the tower transaction as well as increased use of build-to-suit towers

MTN had last week Friday agreed to settle with the Nigerian Communications Commission (NCC) and pay N330 billion ($1.7 billion) over three years for flouting sim card registration directive in October 2015.

On 26 October 2015, MTN announced that the NCC had imposed a N1,040 trillion fine, subsequently reduced to N780 billion (equivalent to approximately US$3,9 billion using the exchange rate prevailing at the time) on MTN Nigeria.

This  was  related  to  the  late  disconnection  of  approximately  5,1  million  subscribers  whose  registration  documents were considered incomplete.

On 17 December 2015, MTN proceeded with legal action in the Federal High Court in Lagos challenging the fine. On 22 January 2016, the matter was adjourned by the judge to allow parties to find a solution.

On 24 February 2016, MTN made a without prejudice good faith payment of N50 billion ($250 million) to the Federal Government of Nigeria.

Due  to  the  unfortunate  circumstances  occurring  at  MTN  Nigeria,  Group President and CEO Sifiso Dabengwa; Nigeria CEO, Mike Ikpoki and Corporate Services/ Regulatory Executive, Wale Goodluck tendered their resignations on November 9,  2015.

The chairman, Phuthuma Nhleko, was appointed executive chairman on an interim basis to facilitate the resolution of the fine.

He has been working on the process for appointment of a new Group CEO.  The search for a new Group CEO is well under way and would be finalized by the end of June.

MTN shares fell six percent to 135.82 rand as of 4:22 p.m. in Johannesburg, the biggest drop since March 24, after rallying more than 16 percent in two sessions after the fine was settled. The stock is down 29 percent since the penalty was made public on October 26.