Global Insight Perspective | |
Significance | This highly irregular intervention follows just days after the regulator said that the companies had changed their trading names without permission, and that they had to sign new operating licences in which the licence fee had been increased retroactively from 5 billion CFA francs (US$10.5 million) to 30 billion CFA francs (US$63.5 million). |
Implications | MTN and Moov are the largest mobile operators in Benin and, since the operating licences have been withdrawn, both have now temporarily ceased operations. This has left some 950,000 people without services. |
Outlook | The legality of the regulator’s move is highly questionable, and its motivation is a thinly disguised attempt to raise some US$200 million for the government coffers. If allowed to stand, the net result of the decision would mean that three out of four operators would be shut down, leaving only Libercom—a subsidiary of the state-owned OPT Benin—as the only operator in the market. |
Following the acquisition of Investcom by MTN last year, its operation in the country, called Spacetel Benin (Areeba), has since changed its name to MTN Benin in line with all operations within the MTN Group. Likewise, the operator owned by Atlantique Telecom, formerly known as Telecel Benin, has now changed its name to Moov in line with Atlantique Telecom’s other operations in the region. MTN had 514,000 subscribers as at 31 March 2007, and Moov had around 450,000 subscribers.
In a statement issued on 13 July, ATRTP (the regulator) said that “after analysing the two transactions, we came to realise that we were dealing with a transfer of ownership, which is regulated by the law, and not a simple change of names as explained by both Telecel Benin SA and Spacetel Benin SA”, according to the Xinhua news agency.
In an apparent attempt to appear even-handed, but in a move that undermines the premise of the ownership issue, the ATRTP is also applying the requirement to pay the new licence fee to the other two operators, Bell Benin and Libercom. The ATRTP has also reportedly threatened to suspend the operating licence of Bell Benin unless it also pays the new licence fee of 30 billion CFA francs (US$63.5 million). According to Reuters, the ATRTP said that Libercom—which is a subsidiary of the state-owned, fixed-line incumbent, OPT Benin—has undertaken to pay the licence fee, so if Bell Benin does not pay the fee, this would mean that the only surviving operator would be state-owned Libercom. The government would therefore pay itself the fee and in effect close down all three private mobile operators.
Outlook and Implications
These controversial regulatory actions are damaging to the reputation of Benin as a destination for foreign investment. Since his election in 2006, President Yayi Boni has pushed through a robust programme of political and economic reform in a bid to do away with the sloppy management and cronyism that had become endemic in the government under his predecessor. This has been no easy feat for the banker-turned-politician, and he has not earned himself many friends, particularly in the inner circles of the old bureaucracy. In the telecoms sector, however, such sweeping changes appear to have been implemented in an overly heavy-handed manner and seem to run against the grain. President Yayi Boni has otherwise been lauded for his commitment to weeding out corruption and for openness to FDI.
The legality of the regulator’s move is questionable and raises accountability issues of the telecoms regulator within the new government. As most mobile subscribers are now unable to make calls, the issue will generate increasingly vocal complaints from subscribers across all sections of society and could even result in questions being asked of the motivations of the new government. The regulator also announced in January 2007 that it is reasserting a single international gateway through the state-owned incumbent, with the Council of Ministers declaring that all authorisations issued by the previous administration are no longer valid (see Benin: 30 January 2007: Benin Reasserts International Gateway Monopoly). According to Reuters, the regulator announced during May 2007 that it intends to retroactively increase the licence fee for mobile operators from 5 billion CFA francs (US$10.5 million) to 30 billion CFA francs (US$63.5 million).