MTN, Moov give in to Benin

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 17 Sep 2007

Mobile phone service providers MTN and Moov appear to have capitulated in their licence dispute with Benin's Telecommunications Regulation Authority.

The surrender means a million subscribers in the small West African neighbour of Nigeria can now again make and receive phone calls after being stranded for over two months.

Benin suspended MTN and Atlantique Telecom's Moov service on 9 July, saying both companies had changed their names without its permission.

The regulator said MTN and Moov needed new licences. A higher licence fee was also required, with MTN asked to pay $620 million (R4.34 billion).

The companies refused to comply with the move that analysts described as "extortionate", leading to the networks being switched off.

MTN group CEO Phuthuma Nhleko in late August called the crisis "completely unpleasant and unfortunate" and hoped "sanity will prevail fairly soon".

Capitulation

Nhleko and MTN could not be reached for comment this morning, despite numerous attempts. However, wire service Reuters yesterday quoted Victor Tokpanou, VP of the Benin telecoms authority, as saying the "MTN Group has accepted the conditions laid out in the new fees structure".

Speaking on Benin's state television on Saturday night, Tokpanou was quoted as saying MTN had agreed to pay a new 30 billion CFA francs (R456.4 million) fee for a 10-year operating licence. Reuters says this represents a 500% rise over the previous operator fee - but clearly less than what was initially demanded.

Tokpanou added that the settlement followed talks between Benin president Thomas Boni Yayi and his South African counterpart Thabo Mbeki and also with MTN executives.

Moov resumed its service last week after agreeing to pay the new operator fee. MTN was free to operate again from Saturday night.

Settlement welcomed

BMI-TechKnowledge senior analyst Richard Hurst welcomed the move, saying: "Any resolution of this nature is good." He adds that the settlement appears to amount to the networks complying with Benin's demands, raising the question "what was the brouhaha about anyway?"

"At the end of the day, the subscribers were cut off, they were just left stranded, which was unfair," he adds.

Asked whether other regulators would follow the Benin example, Hurst says he expected the reverse. "This is almost a lesson in how not to do things."

About-turn

The settlement, even at a reduced cost, amounts to an about-turn for MTN. Nhleko in late August accused Benin of flouting the law. "We have said to them they are acting outside the provisions of the licence, they are acting outside local law and they are acting outside international law," he said, adding that he expected Benin to abide by its own licence conditions.

Nhleko added that the switch-off had not materially affected MTN's bottom line, as the impact had been "digestible". However, damage had been done. "The damage, unfortunately, will be more to the government than to us, as they have put us in this position."

The MTN executive added the regulator's action was not only "extremely unfortunate" for the ICT sector, "but also for Benin as an investment destination".