Tech giant, MTN Nigeria, is currently locked in a dispute with the Osun State government over an alleged outstanding Right of Way (RoW) fee and penalty worth over N1 billion.
According to documents sighted by Nairametrics, the Osun State Government is demanding the tech company pay a sum of N945 million as RoW fees for 270 kilometres of fibre optic and a penalty fee of N100 million for an alleged non-payment of the fee.
However, MTN said it owed no fee as it had signed a legal contractual agreement with Odua Infraco, which is partly owned by the Osun government and licensed by the Nigerian Communications Commission (NCC), and made all necessary payments to the company before laying its cables in the State.
The documents also revealed that Odua Infraco has the right of way for 1031.44 kilometres across four states (Osun, Oyo, Ondo and Ekiti States) for the construction and operation of fibre infrastructure, for which MTN signed a contract with the InfraCo.
Origin of the dispute
Nairametrics learnt that the disagreement between the State and the tech company started with the former’s appointment of a consultant, Global Transaction Nigeria Limited (GTNL) to handle the collection of RoW charges even with the existence of Odua Infraco doing the same.
According to the documents, MTN’s business relationship with Osun State, through O’odua Infraco, was seamless until the company received a letter dated 14th September 2023 from GTNL introducing itself and informing the company of its appointment as Technical Consultant to the Osun State Ministry of Environment on telecommunications infrastructure within the state.
- GTNL also informed MTN that it had been tasked by the Osun State Government to coordinate telecommunications infrastructure pursuant to the Osun State Environmental Protection Law 2022, including the inspection, audit, and monitoring of installations within the state to ensure compliance with the environmental laws and safety standards to protect the people of Osun State.
- Subsequently, by a letter dated 15th December 2023, GTNL notified MTN of an ongoing investigation of Odua Infraco’s activities in Osun State, alleging that Odua Infraco did not have any legal right to lay fibre optic cables within Osun State and requested for a meeting with MTN.
- At the meeting, GTNL informed MTN that there was a plan to terminate Odua Infraco’s Right of Way and Easement Agreement with Osun State owing to O’odua Infraco’s alleged breach of its terms of appointment, non-remittance of fees to Osun State’s account, contravention of the Osun State Environmental Law, and illegal award of right-of-way to telecommunications operators including MTN.
However, Odua Infraco in a letter dated January 20th, 2024 sent to MTN countered GNTL’s allegations and insisted that its Right of Way and Easement Agreement with Osun State Government was still subsisting.
Amid efforts to resolve the matter, MTN received two letters from GTNL with Demand Notices both dated 25th March 2024, requiring the company to pay N945 million for its fibre cable plus N100 million as a penalty.
Regulatory intervention
While the consultant to the Osun State Government, GTNL, is insisting on the payment of over N1 billion by MTN, Nairametrics learnt that the matter is now before the Compliance Monitoring and Enforcement Department of the NCC.
The telecom regulator is currently seeking a way of resolving the issue which is about to cast a dent on its infrastructure project.
- Recall that NCC in 2018 under its InfraCo project aimed at fast-tracking the deployment of fibre optic cables across the country, licensed Odua Infraco Resources Limited for South West alongside 4 other companies including Brinks Integrated Solutions Limited for North East Zone; Fleek Network Limited for North West; Raenna Nigeria Limited for South-South; and Zinox Technology Limited for Southeast.
- Before that, MainOne’s subsidiary, Infraco Nigeria Limited and IHS were the first two companies to be licensed in 2016 to cover Lagos and the North Central zone including the Federal Capital Territory (FCT).
- However, IHS later returned its licence, which was re-issued to Broadbased Communications Ltd. in 2021.
What you should know
- The battle between MTN and Osun State is emblematic of the broader challenges confronting the telecom sector.
- This has also cast a shadow of doubt over the ongoing plans by the Federal Government to deploy 90,000 kilometres of fibre optic cables across the country.
- According to industry stakeholders, the project is bound to fail with the current revenue-driven stance of state governments on RoW.
- While there is an existing federal policy on harmonized RoW charges of N145 per linear meter to accelerate the rollout of fibre infrastructure across the country, only about seven out of the 36 states have complied.
- As the industry continues to grapple with these obstacles, the NCC is expected to play a crucial role in mediating disputes and advocating for a more conducive operating environment for telecom operators.
