MTN Rwanda will pay the fine imposed on the telecom by the regulator in May for "non-compliance with license obligations” by hosting its IT services outside the country by the end of December, officials have said.

The new development comes after the telecom reached an agreement with the Rwanda Utilities Regulatory Authority (RURA) recently. The telecom had earlier announced it would pay the $8.5 million (over Rwf7 billion) fine by July 31 while releasing its financial results for the first quarter of the year early last month.

However, Rob Shuter, the MTN Group president and CEO, told reporters last week that the firm will now pay the fine over the "next few months” following discussions with Rwanda’s infrastructure minister and the regulator (RURA) over the matter.

"The current status is that we have agreed to pay the $8.5 million (over Rwf7 billion) fine over the next few months. That part of the issue is closed now,” Shuter is quoted by ITWeb Africa website as saying. He said the Rwf7,030,000,000 penalty came after it alerted the regulator of possible breaches on its part.

On May 17, RURA imposed the huge fine as a result of non-compliance with the directives issued by the regulator prohibiting the inclusion of MTN Rwanda in the MTN South and East Africa (SEA) IT hub based in Uganda.

Confirming the development, Bart Hofker, the MTN Rwanda chief executive officer, said the telecom has already made a first deposit and the rest will be paid in the coming five months ending December, 2017. He, however, did not indicate how much the mobile telephone market leader paid in initial deposit.

Hofker said the telecom remains competitive despite the sanction and will be able to pay shareholders a good dividend.

"We registered revenue growth in the first quarter; the second quarter we have even done better according to partial results,” he said in telephone interview on Friday.

The official said the telecom will continue to invest in network improvement, adding that its (network) performance has greatly improved over the past many months.

The telecom firm recorded a 3 per cent increase in total revenue in the first quarter of the year compared to the fourth quarter of 2016.

MTN has 3.51 million subscribers or 42 per cent of the mobile market, 39 per cent (3.25 million users) of the market is for Tigo, and Airtel has 19 per cent or 1.58 million customers. Rwanda’s mobile telephone penetration rate stands at 72.45 per cent (8.35 million subscribers) as at the end of May.

How the fine came about

Group CEO Shuter said that in 2011 the firm was in discussions with the RURA about its intention to build a hub in Uganda that "would manage a few of the markets”. The Rwandan regulator felt very strongly that they didn’t want data or resources to be moved from Rwanda into the hub, he added.

There were some clear lessons from that and I think over the years our team felt that the real concern was over data sovereignty, that the data should not move. In the end they were in the hub and the team felt they had addressed the concerns and when the whole issue came out, the regulator felt that what had been done did not address the concerns.

"I think we made mistakes, we did report the issue ourselves. In the end the lesson we must learn from it is to make sure that we fully document any arrangements that we enter into in these markets so that there can be no confusion over a four or five year matter,” Shuter said.

Building safeguards

Shuter also said MTN’s newly appointed regulatory and public policy team would work hard to prevent future sanctions against it by regulators.

"The formation of the regulatory and public policy team is not a specific response to the Rwanda incident. It is important to have a well-resourced and senior Group team to help our markets manage regulatory and public policy,” the official said.

He added that the practice common across multinationals, noting that the team help in future to avoid or reduce the risk of "these sort of things happening.”