Government moves to review MTN Nigeria’s tariffs as the dominant operator for mobile voice telephony

Finally the Nigerian government is planing a major shakedown of MTN Nigeria operations after a probe revealed that the South African mobile phone company’s control of 44 per cent of mobile voice telephony service undermines competition in the telecoms industry.

MTN Nigeria has been declared dominant operator in the mobile voice telephony voice business by the Nigeria Communications Commission (NCC) and the company will be forced to review its call rates as part of the tougher scrutiny to be imposed on its operations as from May 1, this year by the telecoms regulator.

Eugene Juwah, the Executive Vice Chairman of Nigeria Communications Commission (NCC), who announced the “Determinations of Dominance in Selected Communications Markets in Nigeria” that comes into force from May 1, this year, says that it was the outcome of a study conducted to check abuse of dominant market power by operators and ensure that Nigerian consumers get a better deal. 

Juwah says that the implications of the declaration on MTN Nigeria will see its operations coming under stricter regulatory scrutiny to guard against abuse of its market position in the mobile voice telephony.

The regulatory determination is part of a widespread shakeout in the telecoms market where the regulator says that anti-competitive acts by the big players have stifled open competition in the marketplace.

Juwah says that MTN Nigeria has 44 per cent market share of the mobile voice telephony market while there is also a wide differential of about 300 per cent between on-net and off-net calls “and this is indicative of the likely establishment of a calling club for MTN subscribers.”

The implications of designating MTN Nigeria a “Dominant Operator” in the mobile voice segment of the Nigerian telecoms market is that NCC will now impose regulatory sanction under which regulator will now enforce and implement Accounting separation of the South African mobile phone company, the regulator says.

NCC says it will take steps to collapse the on-net and off-net retail tariffs for MTN Nigeria whereby the differences between the two rates will become and remain the same.

MTN”s operations in Nigeria will also come under stricter regulatory scrutiny as the newly-designated dominant operator will be required by NCC, “to submit details on specific aspects of its operations from time to time as the need arises.”

Following the ruling, NCC says that it will also undertake “a determination of pricing principles to address the rates charged for on-net and off-net voice calls for other operators.”

The regulator says that MTN Nigeria and Globacom also stifles competition in the upstream segment of wholesale leased lines and transmission capacity where they have been jointly declared dominant operators.

According to the NCC, the duo “jointly control about 62% of the public terrestrial transmission infrastructure which is a bottleneck resource in the provision of voice and data services. There are concerns that operators playing in the wholesale and retail sub‐segments of these markets have the leverage to “squeeze” the margins of their competitors who are also their customers.”

Following this, the segment will be subjected to a price cap for wholesale services and floor caps for retail to be determined soon by NCC.

NCC says it is also implementing an accounting separation for the joint dominant operators and will also require them to submit details of their operations for regulatory scrutiny