MTN, Airtel attract most regulatory fines in Africa – Report

MTN and Airtel have suffered more regulatory fines across Africa

The operations of MTN and Airtel have come under intense scrutiny, attracting the most fines from the governments of African countries, a recent study by Xalam Analaytics has shown.

The report entitled, ‘Another fine mess by African telecoms,’ stated that the value of fines imposed on MTN by African governments in the past three years was the highest, reaching about $400m, apart from the Nigerian fine of $5.2bn.

 

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It, however, added that Airtel African operations had been the most targeted by regulatory procedures.

Xalam Analytics said, “Airtel’s African operations have been the most targeted by government procedures, slightly ahead of MTN’s. In terms of fine value, MTN is the largest target of African telco fines – even excluding the $5.2bn Nigeria fine.

“African governments had asked MTN operations to pay around $400m in various forms of sanctions and fees since 2014, an average of around $100m each year.”

In a study of the about 50 procedures of sanctions against telecoms operators across 20 African markets over the 2011 and 2017, Xalam Analytics found that the number of fine procedures had skyrocketed across the continent.

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In 2017 alone, the survey showed that the number of fines imposed on operators tripled and an average of $350m per year regulatory fines and tax claims had been collected in the past two years, excluding the $5.2bn fine imposed by Nigeria on MTN in 2015.

The report, however, noted that not all fines were paid as some were challenged in the court.

In January this year alone, new fines were announced against telecoms operators in Mauritania and Kenya for violations in the quality of service and network coverage.

The report stated, “Between 2011 and 2015, 75 per cent of procedures were related to quality of service and network coverage violations; nearly 60 per cent of the fine value was tied to the QoS (excluding Nigeria’s $5.2bn fine).

“During the 2016 to 2017 period, the QoS accounted for about half of the procedures but less than 10 per cent of fine value, with unpaid taxes and fees driving most of the potential proceeds.”

It also said, “The telecoms boom has made the sector something of a cash-cow for African governments.

Between licence, spectrum and a wide assortment of taxes and fees, telecoms operators have become some of the largest individual contributors to national budgets, accounting for between five per cent and 15 per cent of tax income.

“Lately, however, the cow has been sputtering: In the 10 markets with the largest telecoms fines over the past five years, top-line revenue growth has slowed, averaging three per cent to six per cent during the past three years in local currency terms, down from double-digits between 2010 and 2014.

“In the United States dollar terms, top-line revenue has contracted in many markets.”

The report noted that $5.2bn fine imposed on MTN Nigeria had encouraged other African regulators to take similar actions, in order not be seen as complicity with telecoms operators.

As such, Xalam Analytics said most regulators had rushed to acquire equipment to monitor the QoS as fines were now seen as a key feature of regulatory effectiveness.

The analysts warned that the pernicious cycle of telecoms fining was not sustainable as governments that saw fines as another way to milk the telecoms cow would merely drive more operators out of their markets.

The report stated, “The fine is a convenient and increasingly popular option, but it’s an ineffective fix for the issues it claims to resolve.

“Assuming they are truly interested in resolving the QoS issues, an option would be for regulators to increase the fines – but reallocate proceeds from fines to network expenditures in areas that need it the most.”

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