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The East African : Oct 31st 2015
42 HUGE LOSS IN BIGGEST MARKET Nigeria slaps $5.2b fine on MTN The ≥egulato≥y autho≥ity said fi≥m failed to disconnect un≥egiste≥ed clients By ALLAN OLINGO The EastAfrican market in shock with its surprise $5.2 billion fine on Africa’s biggest mobile network, MTN, for failing to disconnect unregistered subscribers. The fine saw MTN’s stocks at N the Johannesburg Stock Exchange (JSE) plummet by 12 per cent, the biggest single day decline since 1998 as investors quickly offloaded their units. The Nigerian Communications Commission’s fine, which is one of the heaviest ever laid on any African operator, puts the firm’s investments on the continent in question even as analysts say MTN will take many years to settle the penalty. Tony Ojobo, head of public af- fairs at NCC, told Bloomberg that they had switched off the 5.2 million subscribers, which was MTN’s responsibility. NCC accused the firm of delay- ing the disconnection of 5.1 million MTN Nigeria subscribers between August and September, who operated unregistered sim-cards. MTN in a market update con- firmed that it is facing the fine imposed by NCC on its Nigerian unit. “This fine relates to the timing of the disconnection of 5.1 million MTN Nigeria subscribers who were disconnected in August and September and is based on a fine of $1,000 for each unregistered subscriber,” said the company. Early this month, the firm was again caught in another tax evasion storm after being accused of repatriating millions of dollars earned in African countries including Ghana, Uganda, Ivory Coast and Nigeria to offshore accounts in Mauritius. The NCC has given MTN until November 16 to pay the fine, or face the consequences. The commission said that MTN has in the last few years engaged in 28 in- AT A GLANCE A billboard in Kigali advertises an MTN promotion. MTN has had issues with tax authorities in the East African region. Picture: File fractions forcing the regulator to suspend all regulatory services. It still isn’t clear what consequences MTN stands to face. The telecommunication firm has seen its shares slump by 20 per cent (Friday morning) even as ratings agency Fitch adjusted its credit rating to a negative outlook. “MTN complies with all regula- tions and laws, including tax laws, in the countries where we operate, which include South Africa, Nigeria, Uganda and Ghana.” The firm said in response to the accusations. In 2013, the firm’s unit in Uganda was accused of making false declarations in a bid to evade $35 million in Customs duty due on imports of network equipment for the company’s Uganda operation. The case was, however, dropped. MTN, which is valued at $23 bil- lion, further said it is in discussions with the NCC to resolve the matter. According to Bloomberg Index, the telecommunications firms stocks lost more than 12 per cent, with shares worth more than $363 5.2m By KABONA ESIARA The East African RWANDA HAS delisted Kilimanjaro Cement produced by Amson’s Tanzania Ltd from preferential treatment as part of its antidumping campaign to check external competition threatening the domestic market. But the Tanzanian cement manufactur- er has appealed to the EAC committee on non-tariff barriers against the decision on Rwanda. Kigali, once a net importer of cement, is slowly building production capacity among local cement makers. Cimerwa and Kigali Cement have increased production capacity and will soon be able to supply local demand million trading on Tuesday at the JSE. In its interim results for the period ended June 30, MTN said its subscribers grew by 3.4 per cent in the Middle East and Africa. In 2014, the firm reported a 1.1 per cent decline its Nigeria revenue due to a challenging operating environment. African telecommunications au- thorities have been clamping down on unregistered sim-cards in orderto reduce crime and mobile money fraud. Since 2012, Kenya, Uganda, Rwanda and South Africa among other countries that have disconnected unregistered sim cards within their jurisdictions. Last month, communications reg- ulators from Uganda, Rwanda and South Sudan met in Nairobi to establish the legal and technical framework for harmonising sim card registration in the region. Kenya has already outlawed the sale of pre-activated sim cards while Uganda, Rwanda and South Sudan are at different stages in legislating and implementing sim registration. Kenya’s Communications Author- The number of people in millions who were disconnected by the Nigeria Communications Commission ity director-general Francis Wangusi said that the law is clear on the penalties of either using unregistered simcards or not switching of such cards. Currently, telecom operators in Kenya who fail to comply are liable to a fine not exceeding $50,000. On the MTN, is valued at $23 billion and Nigeria is its biggest market with over 60 million subscribers. According to Bloomberg Index, the telecommunications firms stocks lost more than 12 per cent, with shares of more than $363 million trading on Tuesday at the JSE. In its interim results for period ended June 30, MTN said its subscribers grew by 3.4 per cent to 231 in 22 countries in the Middle East and Africa. In 2014, the firm reported a 1.1 per cent decline its Nigeria revenue due to a challenging operating environment. other hand, subscribers found using an unregistered sim card are liable to a fine of $3,000 while mobile operators’ agents found to have sold unregistered sim cards are liable to a fine of $5,000. So far no one has been fined or jailed, as all operators are said to have complied. Uganda is yet to impose any fines on operators with unregistered cards on their networks even as it works on the legal and regulatory framework that will allow the linking of the sim card registration and its national ID database. The acting director for broadcast- ing at Uganda’s Communication Authority, Fred Otunnu, said that they will soon announce the appropriate sanctions against offending operators as provided for under the relevant law. igeria on Monday sent the continent’s telecommunications The EastAfrican BUSINESS OCTOBER 31 - NOVEMBER 6, 2015 Rwanda bou≥se in ≥eco≥d d≥op By ESIARA KABONA The EastAfrican THE RWANDA bourse suffered one of its worst months this year with September turnover of the three listed stocks dropping by an average of 79 per cent Rwanda has three local listed companies — Bralirwa, Crystal Telecom and Bank of Kigali. Statistics from the Rwanda exchange covering trading days from August 15 to September 15, show that turnovers and volumes of all three have dropped sharply. This drop in the turnover has had a direct negative effect on commissions that stockbrokers earn and also reduced margins and net incomes of investors, putting downward pressure on stock prices and hurting investor returns. The Rwanda Stock Exchange market report for October 29, 2015 quotes Crystal Telecom share price at Rwf100 (US cents 13) a drop from Rwf144 (US cents 19), the highest it has ever traded. Investors who bought shares when they were at the highest price are now counting their losses. The 30 per cent drop in the share price of Crystal Telecom has sparked off speculation in the market, with investment advisors telling their clients to wait until MTN Rwanda announces its half year results. This has thus affected the volumes traded on the telco counter and the entire market. “Weak global commodity prices, weakened the economic outlook for most of sub-Saharan Africa. Coupled with currency bleeding that was experienced by most of these African countries this has had investors adopting a wait and see approach on African stock market prices,” said Robert Mathu, executive director of theRwanda Capital Markets Authority. Investors in the beer brewer, Bra- lirwa are also counting losses as the share price has recorded a 40 per cent drop. The highest it traded was at Rwf400 (US cents 52) but it has slumped to Rwf239 (US cents 31). Market analysts predict a further drop in the price of the stock. Rwanda delists Kilimanja≥o Cement f≥om p≥efe≥ential t≥eatment and also position the country to start exporting cement. Kilimanjaro Ce- Richard Tusabe, Commissioner General, RRA. Picture: File ment now attracts 25 per cent import duty like other goods imported from outside the East African Community and Comesa. Rwandan officials allege that Kilimanjaro Cement is imported from Pakistan and repackaged in local bags and so is not qualified to be treated as manufactured within the region. William Musoni, Commissioner Customs Services at the Rwanda Revenue Authority, said before the Kigali government blacklisted Kilimanjaro cement after they jointly carried out investigations with officials from EAC Secretariat that confirmed their fears that indeed some of the cement exported from Tanzania is repackaged. During the 18th East African Community regional forum on non-tariff barriers Rwandan was accused of maintaining non tariff barriers in respect of rules of origin. The East African Community Legislative Assembly recently passed a binding legislation to eliminate non-tariff barriers to trade among East African Community partner states. Kilimanjaro Cement is now required to de- posit a financial security bond, which has resulted in the retail price of the cement shooting up by 23 per cent. Kilimanjaro Cement has risen from $13 to $16 per 50 kilo bag, making it the most expensive on the market. Comparatively, Uganda’s Hima Cement which is accorded preferential treatment costs $13 per 50 kg bag just like the locally manufactured Cimerwa Cement. This translates into a 200,000 tonne surplus of locally produced cement on the Rwandan market. The country also imports cement from regional makers. Analysts welcomed Rwanda’s move to pro- tect its cement manufacturers against cheap imports.
Oct 24th 2015
Nov 7th 2015