How Telecom Giant, MTN Is Snuffing Life Off Local Telecommunications SMEs In Nigeria (A MUST READ!)

MTN Nigeria Communications PLC has seized virtually exclusive control from participating small and medium-scale local and international call market operators known as International Data Access Operators (IDA).

And has practically chased all of them out of the market by strong-arm tactics, including the illegal demand for payment for interconnected international traffic in United States dollars, instead of Naira from the IDAs, contrary to the provisions of the Central Bank of Nigeria (CBN) Act.

In the process, hundreds of direct employees and thousands of indirect employees of these companies have become jobless and now have to swell the ranks of the unemployed in these harsh economic times.

MTN Nigeria Communications PLC claimed that it has a right to demand Dollars because it has been so empowered by the Nigerian Communications Commission (NCC), the regulatory body for technical telecommunications.

The IDAs on their part insisted that a proper reading of the International Traffic Rate (ITR) does not mandate MTN to charge in US Dollars and that in any case, such a determination to charge in a specific currency is not within the mandate of the NCC as currency issues are regulated by the CBN and not NCC.

One of the contending IDAs opined that not even the CBN can contravene the clear provisions of the CBN law which declares in Section 15 that the Naira shall be the legal tender for transactions between Nigerian persons and companies transacting in Nigeria.

Furthermore, Section 20(5) of the CBN Act expressly criminalizes the demand of Dollars for payment for goods and services in Nigeria.

It reads: “A person who refuses to accept the Naira as a means of payment is guilty of an offence and liable on conviction to a fine of =N=50,000.00 or 6 months imprisonment

“Provided that the Bank shall have powers to prescribe the circumstances and conditions under which other currencies may be used as a medium of exchange in Nigeria.”

However, MTN has no respect for the Nigerian law and the company will never try in its home country of South Africa as it routinely does in Nigeria.

When NCC requested that all operators start registering their subscribers, only MTN stoutly refused and behaved in such a disrespectful way to the NCC and the DSS agents that were sent to appeal for MTN to comply until it was fined $5.2 billion.

But MTN has never learnt its lessons but continues to flagrantly breach the laws of Nigeria. One of the IDAs asked if MTN South Africa or any other company in the world can demand foreign currency for the termination of international traffic in their country. MTN has become a law unto itself in Nigeria because of the usual Nigerian factor.

When MTN was fined in 2015, many non-telecom industry members of the public felt sympathy for the company, but most industry operators felt MTN deserved the fine for its intransigence and bullying tactics against other operators.

For example, why is it only MTN that is carrying on this defiant act, when others like Glo and Airtel, both companies of Nigerian origin, accepted to collect Naira as payment? What is the real motive and goal of MTN?

It appears that tax evasion is one possible motive as MTN has always been suspected of transfer pricing and NCC continues to monitor this unwholesome practice that negatively affects Nigeria’s foreign reserves.

But why did the CBN under Emefiele not call MTN to order? Allowing MTN to demand dollar payment only strengthens its ability to repatriate foreign exchange from Nigeria and also evades the payment of tax.

It would be recalled that MTN was indicted for tax evasion by the Federal Inland Revenue Service (FIRS) in Nigeria and the same goes with MTN in Ghana.

It seems, however, that the CBN under Emefiele and FIRS have been pocketed by MTN as none of them is willing to take up the MTN and enforce the laws of the land.

When the representatives of the IDAs requested a meeting with the CBN to clarify these issues, it took several letters before a meeting was scheduled with the Banking Supervision department under its Deputy Director.

The Deputy Director, Evelyn Asuquo, clarified the position of the law and in addition made it clear that its understanding was different from the position taken by the MTN that it was its right to demand Dollar payment, contrary to the CBN Act; Sections 15 and 20.

The Deputy Director claimed that though the rates were denominated in Dollars by the NCC, the actual payment was not mandatorily to be in Dollars. Having thus clarified, the CBN showed no stomach to take up the MTN on this issue, and this raises the question as to why.

On one hand, we would remember the shenanigans of the CBN governor chasing mallams changing pittance Dollars under the trees in Abuja, yet, big corporations like the MTN flagrantly violate the law and drain billions of dollars without control or checks to South Africa and Dubai.

IDA operators are very much aware of how MTN has structured its operations to manipulate and monopolize internationally through a Dubai subsidiary of the company called MTN Connect International.

All traffic destined for MTN Nigeria worldwide is to be routed through MTN Connect so that it can manipulate the rates and retain bigger profits in Dubai to avoid taxes in Nigeria.

Even, the FIRS is very much aware and queried MTN for tax evasion. In April 2022, a committee in the House of Reps summoned the Federal Ministry of Trade officials over alleged N2.6 trillion tax evasion by the MTN.

The Chairman of the House Committee on Public Accounts, Oluwole Oke, was reported to have disclosed that the AGF report indicated that the documents relating to the N2.6 trillion capital allowances were allegedly forged.

Anticompetitive practices of MTN including refusal of MTN:

1. To receive International SMS Traffic from IDAs.

2. To provide the requisite number of SIP Trunk channels requested by IDAs.

3. To route outgoing international voice, data, vision or any other kind of message via IDAs to international destinations.

The IDA licence permits IDAs to provide two-way voice, data, vision or any other message transmission services to international destinations.

IDA points to excerpts from the IDA licence:

Condition 18: Specific Conditions for the Provision and Operation of International Data Access Gateway Services Scope of Operation in paragraph 18.1.

The licensee is authorized to provide and operate International Data Access (IDA) connectivity whether one-way or two-way, point-to-point, point-to-m multipoint for voice, data or vision or any other kind of message for reception within Nigeria or any other international destination.

Paragraph 18.2: The licensee is authorized to operate IDA connectivity using (a) Space segment provided by any satellite organization approved by the Commission, or; (b) International transmission media including microwave and cable.

18.3: The licensee is authorized to provide international connectivity to various network service providers located in Nigeria.

Conditions 28.1 and 28.2 of the IDA licence:

“Mandates the IDA to provide and demand interconnection to and from network operators as the case may be.”

It is clear from above, that IDAs are duly licensed to provide two-way international voice, data, vision, SMS or any other kind of message services, but the greed of MTN will not allow it to obey the NCC’s licence conditions and the effects of the refusal of MTN to assign SIP Trunks Channels to the smaller local Nigerian operators include:

1. Congestion on the international trunks.

2. Low Answer Seizure Ratio (ASR).

3. High Post Dial Delay (PDD).

4. Low Average Call Duration (ACD).

5. Poor Quality of Service (QOS).

6. Bad User Experience.

7. Loss of goodwill.

8. Loss of revenues.

9. Demarketing of IDAs in the International Telecom marketplace.

These actions negatively impact IDA operators’ ability to survive as licensed operators in Nigeria, leading to serious socio-economic consequences for Nigeria, including but not limited to:

a. Loss of employment for Nigerians.

b. Loss of revenues for the government in the form of AOL and taxes.

c. With its consequent effect on the resources available to the government to provide socio-economic amenities and services.

The actions of the MTN are clear:

a. unfair competition practices.

b. abuse of market power.

c. contravention of the following Sections of the Nigerian Communications Act 2003, the Interconnect Regulations 2007 and their licence obligations.

MTN continues to commit infractions against the Telecommunications Networks Interconnection Regulations 2007.

For example, Section 2(1) stipulates that the Commission shall encourage and secure adequate interconnection and interoperability of services, carry out its functions in a way that promotes efficiency, and sustainable competition and gives the maximum benefit to users, take all necessary measures to remove any restrictions which may prevent licensed telecommunications operators from effectively negotiating interconnection agreements between themselves, and where a licensed telecommunications operator enters into an interconnection agreement with another licensed telecommunications operator, the Commission has the right to review such interconnection agreement to ensure conformity with the provisions of the Act, these Regulations and any guidelines on interconnection adopted by the Commission.

3(1) Interconnection agreements shall be negotiated freely and in good faith between the parties involved and each negotiating party shall not intentionally mislead the other party; or coerce the other party into making an agreement that it would not otherwise have made, or intentionally obstruct negotiations.

3(3) The interconnection agreement shall be in writing and comply

with – the provisions of the Act, these regulations and any guidelines on interconnection adopted by the Commission; and the principles of neutrality, transparency, non-discrimination, fair competition, cost orientation, universal coverage, access to information, equality of access and equal terms and conditions.

Section 10(b) adheres to the principle of non-discrimination concerning interconnection offered to other licensed telecommunications operators, in particular, it shall apply similar conditions in similar circumstances to interconnected licensed telecommunications operators providing similar services and provide interconnection facilities and information to other licensed telecommunications operators under the same conditions and of the same quality as it provides for its services or those of the group of companies or partners.

The Commission may impose or prohibit conduct by a dominant telecommunications operator, if the operator is violating the obligations imposed on it, and declare interconnection agreements wholly or partially invalid to the extent that such dominant telecommunications operator abuses its dominant position in the market.

The Commission shall ensure that the differences mentioned in paragraph (5) of this regulation, do not result in the distortion of competition and in particular that the dominant operators apply the appropriate interconnection tariffs, terms and conditions when providing telecommunications for its services or those of its subsidiaries or affiliates in accordance with the principle of non-discrimination.

Section 13(4): The Commission may impose conditions in interconnection agreements in order to ensure interoperability of services, including conditions designed to ensure satisfactory quality for the end-to-end services provided to users and such conditions may include implementation of specific technical standards, specifications or codes of conduct and any quality of service standards specified by the Commission.

Section 18: A licensed telecommunications operator who contravenes any of the provisions of these regulations is in breach of these regulations and is liable to such fines, sanctions or penalties as may be determined by the Commission, from time to time.

It should be noted that some MNOs, despite the written directive of the Commission, also insist that all IDAs should present bank guarantees before interconnection, an added cost that the foreign partners do not bear. The IDAs, even though far smaller than the MNOs, bear the entire cost of interconnection for links that generate revenues for both parties.

Implementation of the Local Content Policy

According to research by OMDIA Research and Consulting, voice traffic made up 72% of Nigeria’s overall $6.5bn (USD) mobile revenues in 2019.

Please see below, excerpts from the NCC 2020 Subscriber/Network Data Report:

Local and National Telephone Traffic in 2020

As of December 2020, total outgoing local and national traffic was 150,825,830,687.40 minutes, while total incoming local and national traffic was 151,871,687,402.67 minutes.

MTN had the highest total outgoing and incoming traffic of 103,531,547,686 and 105,473,566,557 minutes respectively in 2020.

Outgoing and Incoming Mobile to (and) from International Traffic in 2020

As of December 2020, total outgoing mobile international traffic was 453,202,089.27 minutes, while total incoming international traffic to mobile was 717,166,679.72.

MTN also reported the highest outgoing traffic of 270,177,167 and the highest incoming traffic of 264,977,868.6 for the period under review.

MOBILE (GSM)

FIXED WIRED/WIRELESS

VOICE OVER INTERNET PROTOCOL (VoIP)

99.8%

0.1%

0.1%

It boggles the mind that MTN which came to Nigeria in 2002 with a mere pittance in investment, now wants to dominate and monopolize the entire telecommunications market.

At the time MTN got its MNO licence from the NCC, the international call market was reserved only for NITEL based on the argument of national security and the NCC had argued strenuously that it needed to liberalize the international market partly to encourage the new entrants MTN and ECONET to profit from the international call market.

NITEL was however reluctant to interconnect with MTN and ECONET and the NCC had to use its regulatory powers to compel NITEL at that time.

Now, MTN has grown and become an unchallengeable monster terrorizing the whole industry and succeeded in doing what even NITEL could not do!

It is time to call the MTN to order because if MTN succeeds in this part it is towing, it would successfully become a National Security risk as it will control and be able to monitor all international calls to and from Nigeria.

The National Security Adviser (NSA) and other security agencies may as well take note now before it is too late.

Written byYewande Grillo, an IDA telecommunications company executive