How GSM billionaires defied NCC deadline on N1.17b fine

If all goes according to plan, the nation’s telecoms regulator and the Big Four GSM networks are billed to meet today in a convergence that may define the way forward in the controversial N1.17b service quality fines imposed on the four companies, writes Shina Badaru

While the Abuja meeting was underway with the Minister of Communication Technology, the offices of the four companies in Lagos also received court injunctions said to have been filed at the Federal High Court Abuja that seek that they pay the fines directly to subscribers while asking the court to restrain them from paying the N1.17billion fine to NCC. it served as final trump card used by the operators to defy last Friday's payment deadline imposed by the telecoms regulator. Graphics: Technology Times

Lagos. May 30, 2012. Barring a last-minute change of mind, the Nigerian Communications Commission (NCC), MTN Nigeria and three other GSM network operators are billed to enter into a closed-door meeting today to wade off a looming face-off after the four sanctioned companies defied last Friday’s deadline to pay N1.17billion in poor service quality fines imposed by the industry regulator.

The nation’s Big Four GSM operators: MTN Nigeria, Airtel Nigeria, Globacom and Etisalat Nigeria, who are beneficiaries of varying sums of punitive fines, were also at a closed-door meeting with Minister of Communications Technology, Omobola Johnson, last Friday seeking her cooperation to prevail on NCC to drop its tough stance on service quality.

NCC has maintained it would not meet with the sanctioned companies who represent massive influence within the Nigerian telecoms industry until the fines have been paid.

The Communication Technology Minister had last week denied that she assured the companies not to pay the fines citing that she only called the meeting to explore ways of  addressing impediments in the way of attaining optimal service quality by the telecoms operators.

Her denialcame in the wake of indications that she may have assured the affected operators to stay action on the regulatory deadline imposed for last Friday, May 25 which also coincided with her meeting with the four companies.

Minister of Communication Technology, Omobola Johnson (in picture): "The Minister was clear that she could not review the decision of NCC to impose a punitive fine on the operators but has promised to prevail on the regulator to review the deadline for the payment of fines by the companies", a source at the meeting told Technology Times yesterday confirming that a mid-week meeting may be in the offing between the NCC and the quartet of MTN Nigeria, Airtel Nigeria, Globacom and Etisalat. Photo: Damilare Bankole/Technology Times

“The Minister was clear that she could not review the decision of NCC to impose a punitive fine on the operators but has promised to prevail on the regulator to review the deadline for the payment of fines by the companies”, a source at the meeting told Technology Times yesterday confirming that a mid-week meeting may be in the offing between the NCC and the quartet of MTN Nigeria, Airtel Nigeria, Globacom and Etisalat.

However, the road to today’s scheduled meeting in Abuja has been a chequered one since NCC imposed varying sum of fines on MTN Nigeria (N360m), Airtel Nigeria (N270m), Etisalat Nigeria (N360m) and Globacom (N180m) totaling N1.17billion over their failure to meet service quality benchmarks pegged by the regulator on delivery of telephony to subscribers.

The telecoms regulator directed the four companies to pay their respective fines not later than May 25 this year or risk fresh rounds of punitive fines pegged at N2.5million per day if they default in meeting the payment deadline.

According to NCC in its April 2012 Audit Report, MTN, Etisalat and Airtel failed to meet the Commission’s target during the months of March and April this year when the regulator undertook the review while, “Glo recorded value cannot be validated in view of earlier comments above.”

NCC is dusting up its regulations on service quality with its stance to ensure that telecoms operators meet benchmarks. Inset (below) is Executive Vice Chairman, NCC, Eugene Juwah. Click on the image to download the NCC Quality of Service Regulations

The report cites that, “general performance by the operators was poor on this KPI (key performance indicators) in the period under review. Etisalat recorded the worst performance when compared with others and Commission’s minimum threshold in the period under review.”

Last Friday, the deadline for the payment of the fines, industry watchers swung their attention on Abuja, the nation’s seat of government housing the corporate headquarters of NCC on the D-day that the Big Four were expected to comply with the payment directive.

Initial indications had emerged at noon that none of the four operators had paid their fines by the time the regulatory agency’s officials received transactions advice from NCC bankers, an official source conversant with the situation told Technology Times anonymously.

A deadlock appears imminent as the coalition of sanctioned GSM operators may have chosen to rebuff the regulator’s deadline, a development that has seen the agency dusting up its Regulations on Quality of Service, the legal basis upon which the sanctions were imposed by NCC, according to insiders.

According to the source who does not want to be quoted by Technology Times because of the sensitivity of the matter, officials of the telecoms regulatory agency are waiting till close of business that day to decide the next line of action.

“They will have a full picture by Monday next week since the deadline issued them expires at close of business today. We shall know the situation of things latest by Monday and decide next course of action after getting confirmation from the NCC bankers”, an official source had said on Friday.

Among the four companies are the GSM Big Four of MTN Nigeria, the number one operator by subscriber numbers; Globacom, Airtel Nigeria and Etisalat Nigeria that currently control over 90 per cent of active phone connections that peaked at 99.6 million lines at the end of March this year.

According to the NCC Deadline Timeline monitored by the Technology Times team in Abuja, the seat of the telecoms regulatory agency as well as Lagos, the nation’s commercial capital and home to the operational heads of the four mobile phone companies, it was confirmed that no payment was made into the telecoms watchdog’s coffers at close of the May 25 deadline imposed for payment of the fines.

Meanwhile, a chain of seemingly unrelated events were unfolding last Friday that was to offer the sanctioned operators a temporary respite from a looming faceoff that could have been triggered by their stance to collectively decide to defy the NCC payment deadline.

According to a source conversant with details of the meeting between the Minister of Communication Technology and the Big Four in Abuja last Friday, she was aware of extant provisions of the laws granting autonomy to the NCC to regulate the telecoms sector in Nigeria.

As the autonomous industry regulator, a direct instruction by her Ministry may carry no powers of law to effect the reversal of the N1.17billion fine but diplomacy could pull off a few concessions in favour of the telecoms companies.

One of the options was to request a “cease action” from the NCC following the defiance of the Friday payment deadline pending the outcome of a meeting between the regulator and the Big Four.

This would include not sanctioning the operators for breaching the payment deadline as well as the suspension of imposition of a further N2.5million fine per day that applies in the event of a breach by the affected companies pending outcome of a meeting planned for this week, a development that may have led to the brokering of today’s meeting, Technology Times learnt.

While the Abuja meeting was underway, the offices of the four companies in Lagos also received injunctions said to have been filed at the Federal High Court Abuja seeking that they pay the fines directly to subscribers while asking the court to restrain them from paying the fines to NCC.

Chairman, Globacom, Mike Adenuga Jnr (in picture): "Things moved very fast after the meeting with the Hon Minister on Communication (Omobola Johnson) on the issue of fine imposed on the four major telecom operators and before we knew it, we were served with a court injunction restraining us from paying the fine."

The operators confirmed they received the injunctions said to have been filed by four subscribers who deposed to affidavits in the Abuja courts as concerned parties representing the interest of subscribers in the country and urging that the fines be paid directly to phone users rather than NCC.

Technology Times is yet to independently ascertain the veracity of this claim as at the time of this report but operators, who have kept sealed lips on details of the matter, confirmed receiving the injunctions last Friday coinciding with their meeting with the Minister of Communication Technology.

“Things moved very fast after the meeting with the Hon Minister on Communication (Omobola Johnson) on the issue of fine imposed on the four major telecom operators and before we knew it, we were served with a court injunction restraining us from paying the fine”, says an official statement by Globacom to a media enquiry by Technology Times last Friday.

An official of Airtel Nigeria confirmed that the company also received a similar injunction that cuts across the Big Four in a further development that was to bring a new twist to the NCC deadline.

The GSM quartet reckons that with the lobby of the Minister and the legal restraint from the Abuja court, they may have found trump cards in getting a temporary respite from NCC.

They are banking on today’s proposed meeting after previous unsuccessful attempts to meet with the Executive Vice Chairman, NCC, Eugene Juwah and the regulator’s top brass whose stance they understand to mean that it will no longer be business as usual when it comes to quality of service delivery to telephone subscribers in Nigeria.

In separate letters notifying the four affected GSM operators of the sanctions and jointly signed on behalf of the EVC by Head, Compliance Monitoring & Enforcement, U. A. S. Maska and Director, Legal & Regulatory Services, Josephine Amuwa, the regulator said they were penalised for failure to meet the Network Key Performance Indicators (KPIs) in the months of March and April, 2012.

NCC says it monitored quality of service standards for the two months that revealed varying degrees of failure by the Big Four “to meet the minimum standard of quality of service including the key performance Indicators (KPI’s) as specified in Schedule 1 Table 2 of the Quality of Service Regulations 2012.”

According to NCC, “Whereas the Commission had noted the performances in the months of January and February 2012 as being below the specified thresholds however, for the purpose of enforcement of the new Quality of Service Regulations, the Commission had taken these periods as grace period”

In the case of MTN Nigeria, the telecoms market leader by subscriber numbers, the network service quality audit report revealed that it failed to meet the threshold set by applicable regulations of NCC which “is in contravention of the provision of Section 104 (a) of the Nigerian Communications Act, 2003.”

NCC says that following the default by MTN Nigeria, the operator became liable for the sum of N15 million for each parameter for a service contravened in the month of March, 2012 and a further sum of N2.5 million for each parameter for a service for each day the contravention continued throughout the month of April, 2012.

The regulatory agency further directed MTN Nigeria to pay a penalty of N360million on or before May 25, this year for failure to meet the Network KPIs for the months of March and April 2012 adding that, “upon failure to settle the said penalty within the stipulated period, such penalty shall attract a further sum of N2, 500, 000 (two million five hundred thousand naira only) per day for as long as the contravention persists.”

Group CEO, MTN Group, owners of MTN NIgeria, Sifiso Dabengwa (in picture): NCC directed MTN Nigeria to pay a penalty of N360million on or before May 25, this year for failure to meet the Network KPIs for the months of March and April 2012 adding that, "upon failure to settle the said penalty within the stipulated period, such penalty shall attract a further sum of N2, 500, 000 (two million five hundred thousand naira only) per day for as long as the contravention persists."

Etisalat Nigeria, jointly-owned by Etisalat and Mubadala of the UAE and Nigerian investors also suffered a similar fate as its South African rival, MTN Nigeria.

Etisalat Nigeria will also pay a penalty of N360million under similar terms imposed on other operators for default in meeting service quality thresholds within the two months audited by NCC, the regulator said.

NCC says that the same default was also applicable to Airtel Nigeria, owned by Bharti Airtel of India, that is also to pay a penalty of N270million latest by May 25, this year with a condition that, “upon failure to settle the said penalty within the stipulated period, such penalty shall attract a further sum of N2, 500, 000 (two million five hundred thousand naira only) per day for as long as the contravention persists.”

On its part, Globacom, the Second National Operator (SNO), will pay a penalty of N180 million latest by May 25, this year or face additional sanctions, “upon failure to settle the said penalty within the stipulated period, such penalty shall attract a further sum of N2, 500, 000 (two million five hundred thousand naira only) per day for as long as the contravention persists.”

In a swift response, the affected companies teamed up insisting they have a case citing that the operating environment impedes the attainment of the telecom regulator’s expectations from service providers.

In a joint statement, the coalition expressed concern that, “fines will not bring about the desired service quality improvements or offer a lasting solution but will merely deplete essential resources that would otherwise be deployed for network roll out.”

They urged government and telecoms administration in Nigeria to work in harmony towards continued promotion of investment in the telecoms sector.

“We wish to use this medium to call on the NCC, the National Environmental Standards and Regulations Enforcement Agency, the Minister of Communication, the National Assembly and the Office of the National Security Adviser to work in harmony to put in place an environment in which we can continue our substantial investments in pursuit of delivering world class telecommunication networks”, the four companies said in the joint statement.

They said that they have invested over N1trillion within the last decade in building and enhancing their networks and plan a further N400billion in 2012 alone on further network spending.

“We are all equally frustrated and concerned about the failures to meet customer expectations and needs with respect to the quality of service. Nigeria deserves and needs first class telecommunications networks. We thus apologize unreservedly to you, our customers, for those occasions when you have been disappointed or inconvenienced by a lapse or failure to deliver the requisite level of quality of service. We however believe that it is necessary to explain the major challenges we face as operators and ask for your understanding and support”, they said.

The mobile phone companies attributed the main source of problem standing in way of attaining high quality of telecoms services as power under scoring that every cell site is powered daily and all-year-round by two diesel generators requiring regular diesel supply and 24-hour security protection.

“We need to recognize that benchmarking quality of service against countries which are not operating in such an environment”, the GSM Big Four added.

They also noted that frequent fibre cuts linking the cell sites which are “frequently malicious in nature” is another key impediment to optimal quality of mobile telephony services.

Due to this, “operators have asked that Telecommunications Infrastructure be declared ‘Critical National Infrastructure’ which would result in enhanced protection for these assets and criminalize the wilful damage of same.”

The quartet also added that multiple taxation by Federal MDAs, State and Local Governments have lately promoted a recent trend towards closure of sites by these government institutions.

According to the companies, “the issue of security is a prevalent threat from our operating environment. We have had particularly unfortunate instances where our employees have been physically assaulted and in some instances killed during site maintenance visits, all in a quest to sustain service quality.”

The companies underscore that while they continue to deepen investments to improve service quality, “it needs to be pointed out that in the telecommunications industry, such investments do not yield the requite improvement in service quality until well after 12 months.”

In the wake of the NCC sanctions mandating them to return over N1.17billion in service quality fines to the regulator latest by May 12 this year the GSM quartet said that due to the capital-intensive of their operations they claimed that, “a regime of sanctions will inevitably erode the confidence of financial institutions and critical partners in the industry.”

The operators add that they “are also concerned that it could create an atmosphere of anxiety and regulatory uncertainty which is unattractive to investment” while adding that, “we are therefore actively engaging with our Regulator to resolve this issue.”

According to them, “solutions being explored include ensuring a forward-looking quality of service framework, taking into account pertinent environmental factors affecting service delivery and preserving the capacity of the industry to attract the requisite level of investment in infrastructure to meet stakeholders’ expectations.”