EXPOSED: How MTN Nigeria muzzles out indigenous Nigerian telecom firms
Joy Agwunobi
Despite the steady growth of Nigeria’s telecommunications industry, the sector has become a tough battleground where smaller, homegrown networks struggle to survive. While millions of Nigerians rely on the services of MTN Nigeria, Airtel, Glo, and 9mobile to stay connected, the dominance of the country’s largest operator, MTN Nigeria, is now under intense scrutiny.
Ayoola Oke, a former Special Adviser to the executive vice chairman of the Nigerian Communications Commission (NCC), has called on the country’s competition regulator to unbundle MTN Nigeria.
Oke alleged that the telecom giant’s anti-competitive practices have crippled indigenous network operators, turning Nigeria into a “graveyard” for homegrown telecommunications businesses.
In a detailed account of the industry’s decline, Oke, who is also the managing partner of Ayoola Babatunde Oke & Co, pointed to the disappearance of numerous Nigerian telecom firms that once thrived alongside foreign operators.
“This is a fact. While we had nearly 30 network operators around 2008 to 2010, by 2015, Nigeria had become a graveyard for indigenous, homegrown telecommunications networks,” Oke said. “Many of these companies, which were once vibrant and successful, eventually shut down. We had networks like Startech, Starcom, and Realtel. There was even an ISP network, Linkcell, that was quite popular at the time.”
He further listed other defunct players like Multilinks, Monacom in Kano, and Intercellular, companies he said contributed significantly to the growth of the telecom sector but were eventually forced out of the market.
“These businesses were growing, handling substantial traffic, and contributing to the sector’s growth. However, many of them closed shop. While some might attribute this to poor management or interconnection debts, not all of these companies were mismanaged. I can confidently say that Starcom, Startech, and Multilinks were well-run enterprises,” he explained.
According to Oke, MTN Nigeria, which was initially shielded from competition during the early 2000s to encourage its growth, eventually leveraged its dominance to suppress competition. He alleged that the company adopted a pattern of lodging complaints against rival operators, often leading to disconnections that disrupted services and ultimately drove these companies out of business.
“We had a situation where MTN, a company initially protected from NITEL and encouraged to develop, later became a major disruptor in the industry. From 2000 to 2010, MTN played a significant role in developing Nigeria’s telecom sector. However, as they grew, they began engaging in anti-competitive practices, targeting any company that showed potential to challenge them,” he said.
He added: “One of their tactics was to lodge unfounded complaints against these companies, leading to their disconnection. In telecommunications, disconnection is akin to treason; it cuts a company off from its customers and partners, effectively crippling its operations. Initially, many of us did not realise what was happening. MTN would accuse these firms of call masking or other alleged infractions, and then disconnect them.
“MTN’s dominance grew as NITEL lost its influence, and even their staff became dismissive of regulatory directives and that is why the Nigerian Communications Commission (NCC) had to step in, imposing several fines on MTN for these practices. In fact, MTN holds the record for the largest fine ever imposed in Nigeria’s telecom industry when they were fined $5.2 billion due to its persistent non-compliance with regulations.”
The expert also recounted an incident involving a regulatory official. “There was even an instance where an NCC staff member inadvertently confirmed the suspicions many held about MTN’s practices. The employee mentioned that MTN believed it had permission to disconnect any operator it suspected of illegal call refiling.”
According to Oke, call refiling involves manipulating caller ID information to reduce call costs. “Globally, technological advancements have consistently driven down telephony costs, but MTN’s strategy seemed geared towards keeping prices high,” he said. “Call refiling is illegal because people are trying to take advantage of technology to provide services at a cheaper amount of money. Meanwhile, MTN does not want the prices of telecom services to go down; they want them to go up. But all over the world, the prices of telephony are going down because of technology.”
Oke noted that the global telecommunications landscape saw significant changes between 2000 and 2010 with the introduction of Voice over Internet Protocol (VoIP) technology. “VoIP, initially developed in Israel, enabled voice communication over data networks, significantly reducing the cost of voice calls. As data networks expanded, the cost of voice traffic dropped, aligning with global trends. Yet, despite this technological evolution, MTN appeared intent on maintaining high call tariffs, contrary to the worldwide movement towards more affordable telecommunications services,” he explained.
He further highlighted the advancements in VoIP technology. “As of 2000, the quality of Voice over IP was not yet good enough for widespread use. But by 2010, the standards of Voice over Internet Protocol had improved tremendously, making it a technology accessible to everyone,” Oke said. “This global shift was a major factor behind the reduction in international call charges as telecom companies worldwide adopted the technology to provide services more affordably.”
“This is what should be happening in Nigeria as well. However, we have MTN Nigeria pushing for price increases instead,” Oke added, while emphasising that the telecom giant’s actions contradict global industry practices where increased VoIP adoption typically leads to reduced costs for consumers.
“Karl, their managing director, initiated these calls for increased tariffs about two years ago,” he noted. “Why must Nigeria be different? Why should our telecom costs go up when global trends show the opposite?”
The legal expert also accused MTN Nigeria of violating Nigerian monetary regulations by demanding dollar payments from local businesses.
“They have been bold enough to continue these practices,” Oke stated. “There have been cases where individuals who exposed such demands were dismissed from their positions. MTN’s dominance is now becoming a major challenge for smaller operators.”
Oke referenced Section 20, Subsection 5 of the Central Bank of Nigeria (CBN) Act, which mandates that all domestic transactions be conducted in naira, describing MTN’s alleged dollar payment demands as both illegal and detrimental to the sector.
Furthermore, he raised concerns about MTN’s international operations, particularly the role of MTN Interconnect in Dubai. He claimed that routing traffic through this offshore entity sidelines Nigerian International Data Access Service Providers and could lead to potential tax evasion.
“By routing traffic through their Dubai-based entity, MTN is effectively sidelining Nigerian International Data Access Service Providers. Once these local players are out of the picture, the country will be entirely dependent on whatever figures MTN provides regarding upstream and downstream revenues. This creates a potential loophole for tax evasion,”Oke explained.
He warned that this arrangement could deprive the Nigerian government of significant tax revenues and create security risks due to the concentration of sensitive telecommunications infrastructure in foreign hands.
Oke called on regulatory authorities to take decisive action, highlighting the importance of the Nigerian Communications Commission (NCC) enforcing competitive practices to safeguard smaller players in the telecommunications industry.
He expressed concerns that MTN Nigeria’s significant growth had resulted in the company exerting excessive influence over the sector. According to Oke, if these practices remain unchecked, consumers across the country may continue to face higher costs and limited service options.
“MTN has grown so large that it now wields excessive influence over the industry,” he said. “If these practices are not addressed, Nigerian consumers will continue to bear the brunt of rising costs and limited service options.”
He also stressed the need for increased regulatory scrutiny of MTN’s market dominance, suggesting that the Federal Competition and Consumer Protection Commission (FCCPC) should investigate the company’s activities.
Oke pointed out that MTN had previously been investigated for tax evasion in Ghana and noted that similar concerns had been raised in Nigeria. He questioned why the company appeared to be working towards complete control of the industry, warning that such dominance could pose a potential security risk to the nation if one company gained unchecked control over the telecommunications sector.
Oke highlighted the significant impact of MTN’s dominance on Nigeria’s telecommunications landscape, describing it as the industry’s most pressing challenge. He noted that the company’s influence had grown so extensively that competitors like Globacom had experienced a considerable decline. According to Oke, Glo’s market share had dropped significantly, and the operator was even disconnected at one point for reasons that remained unclear.
Oke noted, “The biggest challenge we have today is the dominance of MTN. Right now, they’ve done it so well that Glo has reduced drastically. They even disconnected Glo for some reason I don’t know. That is not allowed. As I stated earlier, from the ’90s, you don’t have two big operators disconnecting each other, but somehow NCC granted them permission to disconnect Glo; it was the presidency that stepped in.”
Oke further observed that Glo had been severely impacted, with its market share dwindling to about 12 per cent, while MTN’s share surged past 50 per cent.He explained that despite MTN’s official market share standing at 51 per cent, the company’s actual influence extended to controlling nearly 80 per cent of the sector.
He emphasised the need for urgent intervention, advocating for regulatory measures to curb MTN’s dominance. “It’s time for MTN to be unbundled, to be cut to size, and to be made to obey the laws of Nigeria,” he stated.
The telecom expert also expressed concern about the disproportionate contribution of Nigeria to MTN’s global operations. He pointed out that while MTN operated in 22 countries, the Nigerian market alone accounted for over 27 per cent of the group’s total business. He questioned the level of local participation in MTN Nigeria, suggesting that Nigerians might own less than 20 per cent of the company.
Oke stressed the importance of promoting local content within the telecommunications industry. He argued that genuine local content could only be achieved through increased participation of Nigerian-owned companies. “We need to help Nigerians. Local companies are more likely to bring in local content, not a company that has refused to fully embrace Nigerian identity and participation,” he added.