MTN, Africa's biggest telecommunications company, gained more than 3 per cent on the JSE on Friday, despite the government of Benin expelling MTN Benin chief executive Stephen Blewett.
MTN confirmed last Friday that the Benin government had given official notification for Blewett to leave the country by Friday for his engagement in “activities detrimental to security and public order”.
“MTN has taken note of the government’s concerns, however, it refutes these allegations. Mr Blewett will abide by the government’s request and will leave Benin by the date stipulated by local authorities,” the company said.
Earlier this month MTN said that Benin’s telecoms regulator was reviewing its local unit’s reasons for not paying R3 billion in frequency fees for 2016 and 2017. MTN Benin has contested this amount saying it was excessive. Its total revenue in Benin last year was about R4bn.
George Kalebaila, research director at Johannesburg-based International Data Corporation, said on Friday that the fees were very high compared with the revenue derived from using the licence, adding that for a small market such as Benin such actions could only harm the sector. “When there is uncertainty and ambiguity, it can scare away investors, especially that telecoms as an industry is going through tough times across the continent,” said Kalebaila. “I’m sure MTN is engaging with the regulator to find a solution, but what ever solution should engender certainty and provide clarity so that this kind of thing is avoided in the future.”
Sibonginkosi Nyanga, an analyst at Momentum Securities, said one of the reasons that the MTN share price did not react negatively on Friday was that Benin was a small market for the group. Nyanga said that for the interim results of financial year end 2017, Benin contributed 2 per cent to MTN’s revenue, and in terms of subscribers, accounted for 1.8 per cent, about 4 million, out of the 237 million customers.
Nyanga added that he suspected that the MTN issue in Benin had nothing to do with governance. “It’s a political issue. MTN re fused to pay exorbitant licence fees, which management believed was disproportionate and extreme. Blewett is a target, because he stood firm against the government and by the look of it, Blewett has discharged his duties as directed by MTN Group with the utmost integrity. Most of the African countries feel that the telecoms industry makes too much money and want to milk it,” he said. MTN was slapped with a hefty $1bn (R14bn) fine in Nigeria after it missed a deadline to deactivate unregistered SIM cards last year and has run into problem in recent years, including a law suit of more than R50bn by Turkcell in Iran. The claim was lodged in 2013, after Turkcell alleged that MTN was awarded an operating mobile licence in Iran, in 2004, using bribery and corruption. In May MTN Rwanda received official notification of a $8.5m fine from the Rwanda Utilities Regulatory Authority for non-compliance with the directives issued by the regulator prohibiting the inclusion of MTN Rwanda in the MTN South and East Africa IT hub based in Uganda.