Mr Fola Odufuwa, Managing Director of New Frontier Capital Advisors, has told Technology Times that the unprecedented N1.04 trillion fined mobile phone company, MTN Nigeria, by the government is “excessive and punitive.”

Odufuwa, who is also Founder of eShekels, a Nigerian technology research company, adds his voice to mixed reactions that have trailed the decision of the Nigerian Communications Commission (NCC) to fine MTN Nigeria for non-registration of 5.2 million customers on its network.

Negotiators on both sides are now in talks and hope to reach a deal after MTN Nigeria withdrew a lawsuit challenging the decision of the Nigeria regulator, NCC, to impose the fines.

The mobile phone company also paid an upfront N50 billion, which MTN Nigeria believes represent “good faith” on its part to begin negotiations with government towards resolving the fine.

“One just hopes and prays that common sense and peace will prevail at the end”, Odufuwa tells Technology Times saying he believes both parties are wrong, and the action of the Nigerian government is not in consonance with economic and regulatory realities.

“My personal view is that both NCC and MTN are wrong. The fine is excessive and punitive, and goes against modern economic or regulatory principles”, Odufuwa says.

“What is the size of the market or the balance sheet of the operator that would warrant a penalty of this magnitude? Is the fine commensurate to the offence? Does it even fit into the national government’s present drive for FDIs (foreign direct investments)?”, he asks.

Telecoms regulator, NCC, had said that the fines were not arbitrary as they were based on its existing regulations on SIM Registration, which clearly spelt out the sanctions for breach of SIM Registration rules in the country.[quote font=”georgia” font_size=”22″ font_style=”italic” align=”right” bgcolor=”#” color=”#” bcolor=”#” arrow=”yes”]According to him, “How much was paid for the GSM license in the first place? What will the penalty achieve for Nigeria? Does the regulator know that majority of telecoms companies in Nigeria are dead or dying? Shouldn’t the priority be to create, and not potentially wipe out, jobs?”[/quote]

Odufuwa faults this view when he asks that, “did the drafters of the regulation envisage a situation where a licensee will be penalised in the order of several multiples of its profits for not registering a SIM card on time? I don’t think so.”

According to him, “How much was paid for the GSM license in the first place? What will the penalty achieve for Nigeria? Does the regulator know that majority of telecoms companies in Nigeria are dead or dying? Shouldn’t the priority be to create, and not potentially wipe out, jobs?”

According to Odufuwa, “in any case, you can’t even punish MTN for historical infractions (as NCC claims) as each of those were separately and respectively sanctioned!”

He believes that, “MTN is also wrong for taking the regulator for granted. This it appears to do consistently.”

According to him, “the mood locally is that South African companies have little respect for the local environment where they operate, take their staff, suppliers and distributors for granted, and are scarcely committed to developing the domestic economy for the kind of profits they amass. That is what is being ‘punished’.”

But in Odufuwa’s opinion, “all sides are wrong. Even a fine of $50m would still be too much, and I doubt if human ego, the “egg-in-your-face” factor, will allow the regulator go that low. Both NCC and MTN have boxed themselves into a no-win situation. In lawn tennis, it’s called “unforced error”.”