Nigeria's telecoms regulator has extended MTN Group's operating license, the company said on Tuesday, quelling fears that Africa's biggest mobile phone firm would have to pay a $5.2 billion fine before the license could be renewed.
Johannesburg-based MTN is in talks with Nigerian authorities about the fine, imposed on its unit in the west African country for failing to cut off more than 5 million users with unregistered SIM cards.
(READ MORE: South Africa's MTN renews Nigeria operating spectrum, licence)
Nigeria has been pushing operators to verify the identity of their subscribers, on concerns that unregistered SIM cards were being used for criminal activity in a country facing an insurgency by Islamic militant group Boko Haram.
The fine came months after Muhammadu Buhari was swept to the helm of Africa's biggest oil producer, after a campaign in which he promised tougher regulation and a fight against corruption.
It also came after the kidnapping on Sept. 21 of Olu Falae, former Nigerian finance minister and runner-up candidate in the 1999 presidential election, by kidnappers who the regulator said had used MTN phone lines to negotiate a ransom.
"The kidnappers used MTN SIM cards and MTN was unable to provide any registration data for those SIMs," a memo from the regulator said. MTN spokesman Chris Maroleng declined comment, citing regulatory compliance issues. Falae was released after payment of a ransom.
MTN, founded with the help of the South African government after the end of apartheid in 1994, has written to the presidency and the regulator asking for leniency and a review of the fine, a regulatory source said.
"The letter is asking for a review of the fine downwards. They did not state how much review they want,” the source said.
DEMONSTRATION OF CONFIDENCE
MTN, which earns 37 percent of its revenue from Nigeria, will pay $92.2 million to renew its operating spectrum and extend the licence in its biggest market by revenue to 2021.
"We view this extension as a demonstration of confidence in MTN's capacity to continue to provide ground-breaking and innovative services to its customers," MTN corporate affairs executive Akinwale Goodluck said in a statement.
Shares in MTN, down 25 percent since the fine was announced last week, ended nearly 5 percent higher at 155.54 rand. "It's encouraging and pleasing to see MTN and the regulators are able to constructively engage on commercial basis," said Anthony Sedgwick, a fund manager at Abax Investments in Cape Town.
Some analysts have said the size of the fine risked damaging Nigeria's efforts to shake off its image as a risky frontier market for international investors, though others said it showed Nigerian regulators were keen to enforce the law.
If imposed, the fine would leave MTN with little money to spend on its network in Nigeria because it would wipe out more than two years of annual profits.
Paying the fine this month and the licence fee before the end of December could also prove to be a liquidity headache as the company's cash is spread over more than 20 countries, said Momentum SP Reid analyst Sibonginkosi Nyanga.
Bismarck Rewane, CEO of Lagos-based Financial Derivatives Company Ltd, said the fine was based on outdated average revenue per user (ARPU) of $50 a month, dating from 15 years ago.
"Now ARPU is around $8. The country cannot tolerate corporate arrogance, but this may also deter other investors because of the size of the fine,” Rewane said.