MTN and Airtel are the popular targets in Africa for imposing penalties by African nations, according to Xalam Analytics.
Airtel’s African operations have faced more government procedures, ahead of MTN’s. MTN is the largest target of African telco fines — even excluding the $5.2 billion Nigeria fine. African governments asked MTN operations to pay around $400 million in various forms of sanctions and fees since 2014, an average of around $100 million each year.
The number of fine procedures has skyrocketed across the African continent, according to a review of around 50 procedures of sanctions against telecoms operators across 20 African markets over the 2011-2017 period.
The number of procedures has tripled to nearly 20 in 2017, with the number of fine citations nearly hitting the 50 mark. Telecom regulatory fines and tax claims have averaged around $350 million per year during the past two years, more than 10 times the annual average prior to 2015 — excluding $5.2 billion fine on MTN Nigeria in 2015
Between 2011 and 2015, 75 percent of procedures were related to quality of service (QoS) and network coverage violations; nearly 60 percent of fine value was tied to QoS (excluding Nigeria’s $5.2 billion fine). During the 2016-17 period, QoS accounted for about half of the procedures but less than 10 percent of fine value, with unpaid taxes and fees driving most of the potential proceeds.
In 2017, the average value of a fine was around $6.5 million, down from nearly $20 million in 2016, though the median fine value is relatively small, at less than $1 million. Nearly 60 percent of procedures against telecoms operators take place in West Africa: Regulators in French-speaking Africa are especially sanction-prone — nearly 70 percent of the procedures are started in those markets.
QoS issues continue
The report said network QoS and coverage are largely Capex driven. More mobile operators are cutting capital expenditure levels; in several of the most sanction-prone markets, mobile network capital expenditure has declined by as much as 50 percent from 2013 levels. The cut in Capex means decrease in QoS.
African mobile operators agree to stringent coverage and QoS requirements to win or retain their operating licences. They fail to meet QoS as investment returns decline and sources of capital dry up. As their Capex declines, QoS deteriorates, leading to regulatory fines. The government gets a new source of cash, the operator pays the fine but loses less money than it otherwise would, and QoS issues persist.