MTN and the Nigerian Fine
(8 pages of text)
Case (Pub Mat)
In late 2015, South African telecommunications giant MTN was fined US$5.2 billion by the Nigerian authorities for a mass of improperly registered subscribers—the largest fine of its kind ever imposed in the industry anywhere in the world. MTN was an emerging-market multinational corporation with a track record of successfully operating in some of the toughest, riskiest emerging markets. Thus, it was surprising that MTN had been unable to avoid a fine of this magnitude. Three factors had preceded the fine and changed the business environment in Nigeria leading up to 2015: the first was the war against the Boko Haram movement in Nigeria, which led security forces to demand the registration of prepaid phone cards; the second was the economic crisis caused by the impact of falling oil prices; and the third factor was a change in government. In light of these political risks and government regulations, how could MTN recover and move forward from this difficult situation?
This case is intended for use in international business or strategy courses. In international business, it may be used to illustrate how macro forces impact multinational enterprises (MNEs) operating in emerging markets, and impact MNE relations with host governments. The case illustrates the difficulties in measuring political risk subjectively and through rankings, and underscores the need for large MNEs to evolve in response to developing-world needs. In a strategy course, the case will be useful in illustrating the dangers of strategies evolving without consideration of macro factors. MTN’s strategy in Nigeria evolved due to the maturing of its market and the demands of the MTN Group’s shareholders. When the environment changed, MTN did not recognize that the Nigerian authorities would impose more severe sanctions than under the previous government, despite warnings, and was slow to comply.
Information, Media & Telecommunications
Nigeria, Large, 2015-2016
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