The $5.2billion fine on MTN Nigeria: Lessons for Ghana

Wed, 28 Oct 2015 Source: Dowuona, Samuel

MTN Nigeria has been fined US$5.2 billion for poor SIM card registration and its resultant poor quality of service due to congestion on the MTN network. The fine has already had a ripple effect on the share price of the entire MTN Group. Rightly so because MTN's brand value was recently put at US$4.7 billion, so a $5.2billion fine is enough to make current and potential shareholders nervous.

Following the whopping and unusual US$5.2 billion fine, shares in MTN reportedly dropped more than 12%, which is the worst fall in more than 10 years. The fall is said to have wiped 44 billion rands (US$3.2 billion) off the company’s market value. That is a big blow to any company, not matter how huge.

It is unimaginable to think that the telecoms regulator in Ghana, would slap such a gargantuan fine on any telco in Ghana for whatever offense. The simple reason is telcos in Ghana are not as big as those in Nigeria. The population of Nigeria is huge so the telcos there have big subscribers numbers and they make way bigger money than those in Ghana. But the reason for the fine in Nigeria was bad SIM card registration, and that is where a line can easily be drawn between Nigeria's and Ghana's telecoms industry.

In Ghana today, vendors of telecoms SIM cards sell both unregistered and pre-registered SIM cards to people and the telcos are fully aware but they do not do much to stop it. It is not uncommon to find a vendor who offers pre-registered and activated SIM cards for a higher price and unregistered ones for a lower price. They know some people are not willing to go all the way to the offices of telcos to register their SIM cards, so the vendors have pre-registered and activated SIM cards in the names of unidentifiable persons (very often Nigerian names) and they sell to customers at higher prices.

But usually when they sell those cards, they would inform the buyer that if there was any problem with the card, the user cannot take it to the respective telco's customer service centre for help because it would be discovered that the card was not registered in the user's name. This is not a secret, and the telcos cannot pretend they are not aware their vendors are doing this. As a telecoms journalist, this writer has had several people reporting such issues to him, and he on several occasions reported to the telcos to deal with the issue as and when. But it keep recurring.

A simple REGULAR MYSTERY SHOPPING by the telcos could help them to put the fear of God in these recalcitrant vendors and stem bad sim registration. But they will not do it because those SIM cards are fetching them revenue, and they are comfortable, so proper sim registration can go to the dogs, who cares.

SIMBOX fraud

SIMBOX fraud is not a problem in Nigeria, but it is a huge problem in Ghana, denying the telcos and government tens of millions of dollars every month. It is largely blamed on the legally mandated 19 cents floor price for a minute of incoming international call. But the industry regulator, National Communications Authority (NCA) also maintains that one of the major reasons SIMBOX fraud thrives in Ghana is the loose customer acquisition practices of telcos, and that boils down to bad sim registration. The NCA's argument is that if the telcos do proper sim registration, it will be difficult for the fraudsters to use local sims to terminate incoming international calls, even if they are motivated by the 19 cents.

Every SIM card is supposed to have an easily identifiable and traceable user. But with what the telcos vendors do, it is not easy to trace the persons behind a lot of SIM cards. That is however the smallest part of the problem. The bigger problem is how SIMBOX fraudsters get loads of SIM card in series activated on the networks of the telcos without proper registration. The telcos deny direct involvement in the activation of loads of SIM cards for SIMBOX fraudsters, but it is also true that not once has any telco named anyone whose name was behind a bad sim. They have also never named and shamed any vendor or staff identified to have helped in the activation of loads of SIM cards for fraudsters.

It is true that telcos are also losing money through SIMBOX fraud so it is hard to pin fraud directly on them as institutions. But the seeming laxity in the sim registration practices of the telcos' vendors is not helping matters for their reputation and quality of service. Indeed, poorly registered SIM cards used in SIMBOX fraud usually create congestion in the surrounding communities of locations where the fraudsters hide their simboxes. The reason is, the SIM cards in the simboxes are usually in regular use and they interfere with other people's calls getting through. That harms the quality of service and creates a bad reputation for the telcos, which could lead to sanctions by the regulator eventually. So the telcos have every motivation to invest a little time into wiping out bad vendors engaged in poor sim registration. It is important to repeat that a simple REGULAR MYSTERY SHOPPING will put the fear of God in such vendors and they will quit.

Consumer social responsibility

In Nigeria, it was consumers' outcry and demands for sanctions that pushed the regulator to act decisively and harshly. In Ghana, the consumer is easily accused of being socially irresponsible because the average Ghanaian consumer would rather buy a pre-registered and activated sim at a higher price, rather than insisting on a properly registered one at the stipulated price. Secondly, the Ghanaian consumer does not raise the alarm strongly enough to push the regulator to act in a way that deters the telcos from sitting by and watching SIM cards registered badly.

The media can play a major role in this respect, but there is a symbiotic business relationship between telcos and the media, which often gets in the way of genuine consumer complaints through the media. Telcos are often given loads of "paid for" media space and airtime to make wild claims about their services without providing hard evidence. But consumers' complaints are often either stifled or scrutinized meticulously for evidence, often with the telcos business with the respective media house in mind. The benefits media houses derive from telcos, by way of adverts, tend to override the real role of the media, which is to seek the interest of the poor consumer who cannot pay.


In a situation where telcos maintain such loose sim registration practices, and such relationships with media houses that largely over ride consumer interest, the regulator is fashioning ways to nib simbox fraud in the bud and thereby ensure improved quality of service. One of the ways the regulator proposes to do that is through the interconnect clearinghouse (ICH) policy, under which a clearinghouse is being established for all across-network communication traffic, with additional responsibility of revenue assurance for the state.

The revenue assurance role of the clearinghouse include practical and rigorous steps at fighting simboxing to ensure that even the loosely registered SIM cards being used in SIMBOX fraud would be detected much quicker and deactivated to stop the revenue leakage through bad sims.

The selected ICH operator, Afriwave Telecoms Ghana, recently explained to the Parliamentary Select Committee on Communications that they will use a three-step approach to deal with SIMBOX fraud. The steps are the test calls, CDRs profiling and localization approach. The test calls approach, which is the most aggressive, will involve generating 400,000 test calls from abroad to terminate in Ghana every month. All calls that terminate through a loosely registered SIM card in a SIMBOX will be deactivated.

This does not take away the 19 cents motivation for the fraudsters, but it is more aggressive than all of the five GSM telcos' efforts put together. The five GSM telcos together, reportedly make less than 120,000 test calls a month, so 400,000 is more than three times what the telcos do, and therefore promises to get a much better result.

But the work of the ICH cannot start now because there is a court action against the implementation of the policy, and that has stalled any effort at shipping in the core infrastructure to install at the ready data centre to start work.

Speaking of opposition to the ICH, the telcos have publicly registered their opposition to the ICH and the way it is being implemented. They have raised several issues, which have been discussed in several previous articles. It would appear telcos in Ghana enjoy raising objections to almost every major step the regulator takes in the interest of the state. Telcos had issues with mobile number portability, then with sim registration, and now with ICH. Some of the issues telcos raise are genuine, but the seeming regular opposition to state policies is not helping the image of the telcos. The opposition to sim registration, for instance, seem to have influenced their whole posture to the bad registration practices by their own vendors.

It is time for the NCA to start getting tough again, particularly on the poor sim registration. If the telcos are failing to do simple regular mystery shopping to send the message to recalcitrant vendors that they cannot keep selling pre-registered SIM cards, then the NCA must hire people to do that and start sanctioning telcos whose sims are sold already pre-registered. If that starts happening the telcos will get down unto the streets and start putting the fear on God in their recalcitrant vendors. That will go a long way to stem the bad practice.

As a keen stakeholder in this industry, this writer is willing to assist in stemming this bad sim registration if only the lead stakeholders are willing and committed to the fight. It is a street fight.

Columnist: Dowuona, Samuel