Here Is Mr. MTN’s Dilemma

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Mr. MTN works with Naija unlimited. They do not like each other. While Naija unlimited thinks MTN is arrogant because he knows his job and has skills that cannot easily be replicated, MTN on the other hand, thinks that Naija unlimited has a very difficult work environment. Though, he is very well paid for the job he does, MTN has to provide his own table, buy his own laptop, drive and fuel his own car to work for the company. That made him quite unhappy, but because the salary is good and it would be difficult to get another job that will pay him that much, he is realistic enough to admit that his best bet is to continue working for Naija unlimited.

Then one day, MTN came to work and Naija unlimited had an assignment for him. He was ordered to delete all non-work related documents from his personal laptop, which he uses for the company’s work within 24 hours or else he will face serious sanctions. The MD/CEO of Naija unlimited explained that it has come to his attention that outsiders could have access to the company’s documents if he continues sharing the company’s documents with his own personal documents on his personal laptop. MTN asked for at least a week, to delete his personal documents since hastily deleting these documents could mean that he could also delete some precious documents. Naija unlimited would not hear any excuse.

And so 24 hours passed and MTN has not completed the deletions. Naija unlimited saw a perfect excuse to deal with this arrogant staff of theirs. MTN was immediately sanctioned. He was asked to work for one year without pay. MTN was heartbroken. How did they expect him to feed his family for that period, fuel his car and do all the things that he has to do to stay alive, if he is to work without pay for a year. He knew that he had the choice to resign. But there was the fear, that even if he resigns, he will not find another job as good as the one he currently does.
Mr. MTN’s dilemma is exactly the dilemma faced by MTN Nigeria. The Nigerian Communications Commission (NCC) has slammed MTN with a fine equivalent to a year’s revenue. If MTN is to pay this fine, it will have handover every kobo of revenues it makes in the next one year to NCC and still look for more money to complete the payment by November 16. This is why the fine is not fair.

Nowhere in the world are companies asked to pay more fine than they earn in sales. One of the biggest fines ever imposed was for the Gulf of Mexico oil spill. It was one of the biggest natural disasters to happen in the world, so the US imposed the biggest corporate fine in US history. The fine on BP was $18.7 billion. But guess what, BP’s revenues for that year was $297 billion. So the fine represented just 6.3% of its total revenues in 2010, when the oil spill happened.

If the rational NCC used to fine MTN is applied by the US government to BP, the fine BP would have paid would have been about $300 billion. If the NCC uses the rational that the US government used in fining BP on MTN, the fine MTN should pay would be $252,000, which is 6.3% of its 2014 revenues in Nigeria, instead of $5.2 billion which is more than 100% of its 2014 Nigerian revenues.
A fine is not meant to kill a business. It is meant to be sanction to deter bad behaviour. The current fine imposed by NCC on MTN has the potential to kill the company as no company can hand over a year’s worth of revenues without dying.

The reckless fine has significant negative ramifications for the Nigerian business environment. No investor will ever discuss about investing in Nigeria again without the issue of the MTN fine coming up. It is a risk that future investors will now have to consider and possibly insure against. Even for existing operators, the cost of funding their operations will go up as lenders will now take this risk into consideration when lending to a Nigerian company. At the end of the day, Nigerians are the biggest losers in this MTN dilemma. The costs of operations for many companies have just gone up and that cost will be passed to the average Nigerian either in terms of higher prices or poorer services. MTN deserves to pay a fine for bad behaviour but not a fine that kills the company rather than deter bad behaviour. A corporate fine is meant to bruise not kill.