MTN Benin still off air

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 17 Aug 2007

The stand-off between MTN and the Francophone West African country's telecommunications regulator will soon enter its sixth week.

Benin's Telecommunications Regulation Authority (TRA) suspended MTN and Atlantique Telecom's "Moov" service on 9 July, saying both companies had changed their names without its permission.

The regulator also said MTN and Atlantique needed new licences, with much higher licence fees required. MTN was asked to pay $620 million (R4.34 billion), a 620% increase from the $10 million under the original structure.

MTN and Atlantique - owned by Dubai-based Emirates Telecommunications - have so far refused to pay.

Reuters reported on Tuesday that Benin's remaining two mobile providers have paid. They are Libercom, a subsidiary of state fixed-line company Benin Telecom, and Bell Benin, owned by local businessman Issa Salifou.

The wire service also reported the TRA has granted Nigeria's second-biggest operator, Globacom, a 10-year licence.

An equity analyst, who did not want to be named, says the big question is whether Globacom replaces or supplements the two suspended network operators.

The Reuters report suggests the former, saying Benin launched a tender for a new operator after suspending MTN and Moov. Globacom was selected from 10 tenders submitted and signed a contract with the government on Monday.

Fight it

The analyst says the significance in the Benin debacle lies in what MTN does now and how that is perceived by regulators in the other markets in which the multinational operates.

"In my personal opinion, MTN has every right to fight it," the analyst says. However, what is key is what message this stand-off sends to other countries where MTN operates. "MTN has to treat this very carefully. It may be better to exit rather than capitulate," the analyst says.

"Either way, the money is not material. In the bigger scheme of things Benin is a small market. What matters is how they come out and how they are perceived to have handled the stand-off."

BMI-TechKnowledge senior analyst Richard Hurst says he is sure MTN is working hard to resolve the issue. "They must be locked in some negotiations," he says.

"It would be in the regulator's best interest to resolve this as soon as possible," Hurst adds.

Financial impact

MTN, whose Benin network was previously operated by Spacetel Benin under the Areeba brand, had 514 000 subscribers in Benin, in March. Atlantique Telecom's Moov network, previously part of the Telecel group, has around 450 000.

Benin is a small but significant market for MTN, analysts say.

However, MTN has so far not commented on how the dispute is impacting its revenue. The mobile operator's 2006 annual report indicates the Benin operation generated $41.2 million (R288.4 million) in revenue. It also shows MTN's average revenue per user in Benin is $21 (R147) per month.

Victor Tokpanou, legal adviser to president Thomas Boni Yayi, told state television on Monday there was still room for negotiations with the two suspended operators.

MTN had not responded to ITWeb's request for comment by the time of publication.