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Benin: MTN agrees to new license fee Print E-mail
Tuesday, 18 September 2007
MTN has agreed to pay a license fee of US $60 million to have its Benin network reconnected. The settlement was negotiated by South African President Thabo Mbeki and Benin's President Thomas Boni Yayi.

MTN's network was disconnected on July 12 after Benin’s telecommunications regulator ruled that all four of the country’s mobile operators must pay US$ 52 million in fees after it retroactively raised the price of a license by 500%. MTN refused to pay the new fee.

"The MTN group has accepted the conditions laid out in the new fees structure," the vice-president of Benin’s regulator, Victor Tokpanou said.

MTN has agreed to pay the new fee for its 10 year license. The company’s Benin network does business as Spacetel, and was inherited by MTN through its US$ 5.5 billion acquisition of Investcom. MTN said negotiations with Benin's government were ongoing since the network was shut down in July.

The agreement will see Spacetel accept a new licensing framework. Of the US$ 60 million in fees due from the operator, US$ 30 million is payable within 30 days of signing the agreement, while the remainder is payable in annual instalments of US$ 4.2 million over seven years. In return, the government pledged to issue a new license to Spacetel for 10 additional years, grant the company a three-year tax holiday, exempt it from customs duties for five years and reduce various annual license fees from 6% to 3%.

The government will extend Spacetel's license for a further five years if it meets developmental targets still to be agreed. The government also promised to attempt to facilitate an extension of the tax holiday for more than three years.

Mbeki's direct approach to Benin's president resulted in a deal far more beneficial for MTN than the company could have negotiated alone. The initial regulatory decision was for MTN to pay the US$ 52 million difference between the old license fee and the new license fee for the right to continue operating. That decision involved no extended license period and no tax concessions.

MTN's network in Benin has about 569,000 users, for a 39% market share. Only around 19% of Benin's population are mobile users, so there is good growth potential.

Source: Lesley Stones (Business Day South Africa) - WDR/Intelecon Regulatory News.