MTN Group Limited (MTN) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the MTN update on NIN Registration. [Operator Instructions] There will be an opportunity to ask questions later during the conference. [Operator Instructions] Please note that this call is being recorded. I'd now like to turn the conference over to Thato Motlanthe. Please go ahead, sir.

Thanks very much, Claudia, and good afternoon to everybody. Thank you for joining us on this call on a Friday afternoon just to discuss the developments around the NIN-SIM linkage directive in Nigeria. My name is Thato Motlanthe, Head of Group Investor Relations for MTN. We have a few of our leadership on the call with us today. I'll just run through them, Ralph Mupita, MTN Group CEO; Tsholofelo Molefe, Group CFO; Karl Toriola, MTN Nigeria CEO; Modupe Kadri, MTN Nigeria CFO; Hassan Jaber, MTN Nigeria COO; Adia Sowho, who is MTN Nigeria Chief Marketing Officer; Mazen Mroue, who is the -- now Group CTIO, but formerly MTN Nigeria COO; and we've also got Chima, who manages Investor Relations in Nigeria. Just for this call, which is scheduled for 1 hour, Ralph will outline the agenda and context before we get into the nuts and bolts of the [ issue at hand ]. And just on that note, let me hand over to Ralph.

Yes. Thanks, Thato, and very good afternoon from me as well. And thank you all for joining us for this call late Friday here afternoon in Johannesburg. As Thato mentioned, I'll start off with some context for the call. And we have our group and MTN Nigeria colleagues joining me as well [ to effect ] some of the detail. In terms of the agenda for this call, we'll run through 8 items as follows. The first is on the security situation in Nigeria and how it may provide some context to the current state of play. Second will be the background to the directive from the Nigeria Communications Commission, NCC and what it means. The third area is how we have implemented the directive at MTN Nigeria, Karl will take us through that. We'll then provide directional color on the pro forma potential impacts on the business from implementation of the directive, that's topic number 4. For topic 5, we'll share some insights, again, directional color and the directives impact on some of the KPIs. Number 6, we'll talk about how MTN Nigeria provides support to the Nigerian government's effort to speed up NIN-SIM linkages. On the seventh topic, Karl will just provide some insights into the engagements we've had with our regulators in Nigeria, including the Minister of Communication. And finally, will be just a reminder of how the NIN registration process actually works. I'll begin with the topics, 1 and 2 before handing over to Karl for more details on the other issues. So the background and context, if you cast your mind back to December 2020, you'll recall that a key catalyst for the implementation of the current regulations on NIN-SIM registration was in large part driven by security concerns. On 15 December 2020, the NCC directed all operators to update SIM registration records with valid NINs with an initial deadline of 30 December 2020. We agreed that this was necessary to build a reliable and sustainable national identity management system, a critical enabler that will deliver multiple benefits to the telecommunications industry and Nigeria as a whole. In the long-term, it will aid national economic planning and enhance security, governance, service delivery, and the build-out of a digital ecosystem. You'll all recall that this deadline for NIN update was extended several times over the course of the past year due to logistical challenges and meeting the deadlines and issues encountered during the integration process. So as context for now, we are -- and some of you may be asking why the registration deadline was not extended this time around. You may have read about the train that was hijacked in Northwest Nigeria last week on the 30th of March. Sadly, a number of people from the incidents have since been missing. This was then followed by the development that brought us to where we are today. We believe and the information we have managed together supports this that this provides further understanding to the decision that has been made by the federal government of Nigeria and the directive that came through the NCC. So the second item on the agenda is on the current directive itself. It will be useful to run through the sequence of events that have brought us here, which can provide again more color. So as I mentioned earlier on, the train was hijacked in Northwest Nigeria on the 30th. Then on the 31st of March was the latest deadline for NIN registrations. And the NCC came out with a press release on the 1st of April to urge all citizens and legal residents in Nigeria to use the next few days to submit their NINs as soon as possible. They also directed NIN-SIM to offer enrollment services around the clock also for the next few days. At that stage, they had not defined what would constitute the next few days. On Monday, 4th of April, the NCC issued a further press statement confirming that the federal government of Nigeria has determined that the NIN-SIM policy implementation can proceed as machineries had already been put in place to ensure compliance by citizens and legal residents. This also confirms that the NIN registration deadline would not be extended, and that all telephone communications operators in Nigeria will be instructed to block outgoing calls for telephone lines that had not complied with the NIN-SIM linkage policy from the 4th of April 2022. The NCC once again urged affected individuals to link their NINs and the Minister once again extended this, thanks to telecom operators for their support and achieving the progress to-date. MTN Nigeria then received a formal letter on the evening of 4th of April, instructing that a, the company should implement a phased suspension of services to SIMs that are not associated with NINs with effect from the 4th of April. Secondly, that impacted SIMs should be placed on receive-only with immediate effect. And third, restore connectivity to impacted SIMs only after the owners link their NINs to the SIMs. So I hope this provides some broad context to the latest developments, and we believe the government and regulators of Nigeria remain very constructive regarding SIM registration regulations. There are [ 14 ] subscribers who have not yet linked their NINs, time to do so and without instructing a complete disconnection. At this stage, we have not been advised what a phased implementation looks like, and we continue our engagements with the authorities in Nigeria. So without its context, let me hand over to Karl, the CEO of MTN Nigeria to run you through some of the other items that I mentioned earlier. Karl, over to you.

Thank you, Ralph, and good afternoon to everyone, and we appreciate your time on this call. I'll run through items 3 to 8 of the agenda outlined by Ralph, namely the implementation of the directive, pro forma impact, insights on early trends and support of the government. On the implementation of the directive, getting into how we implemented the directive following the NCC's letter, we implemented the instruction and sought clarification where it was necessary. From the 4th of April, we applied the receive-only instruction to the stipulated subscribers, who have not yet submitted their NINs and placed restrictions on their outgoing voice and SMS services. In our request for clarification, the NCC indicated that we should hold off any action on restricting data services until the reverse with clarification. We subsequently received clarification on the night of the 5th of April, where the NCC indicated the following. A, only subscribers that have not submitted their NINs shall be barred and barring is for outgoing calls only. As such, data services and SMS are exempted. B, the basis of the directive is thus based on submission of NINs and not verification, which is done by the National Identity Management Commission, which I'll refer to as NIMC or NIMC. Again, barring is restricted only to outgoing circuit switch calls. C, unbarring of subscribers who have been restricted to only be upon successful verification of the NIN in line with the Revised National Identity Policy for SIM Card Registration. And D, the directive should be implemented on all topics of subscribers except since belonging to embassies and diplomatic missions. Based on the clarification, all SIMs registered to embassies and diplomats that have been presently barred were consequently unbarred, and the restriction on SMS was lifted for the affected subscribers, who had previously been barred from sending out green SMS. So to be clear, the current implementation of the directive affects all subscribers where NINs have not been linked to SIMs except embassies and diplomatic missions. The restriction is outgoing circuit switch voice only. This cohort has access to all other services including data. Consequently, we restricted outgoing voice services for approximately 19 million subscribers in -- on RGS90 in line with the directive on the 4th of April. The next item is the pro forma impact on subscriber and financials. If I turn to the pro forma impact or more accurately exposures, we consistently disclosed our progress in terms of NIN submissions and linkages. And you have seen from the announcement this week that we have provided an update on this. We note that 47 million subscribers had submitted NINs by the 31st of March, and there was quite a few who submitted consequently between then and the 4th of April. This represents about 67% of MTN Nigeria subscribers base and 76% of service revenue. We also note that based on the NCC directive outgoing voice revenue exposure of the affected subscribers were approximately 9% on an annualized basis. The next item is a key trend since implementing the NCC directives. Let me continue on to the fifth point, which I'm on now, which is an insight into the trends we have seen since implementing directives on the night of Monday, the 4th of April. Of course, there are very short-term trends, but if we look firstly at subscriber trends, as mentioned, we restricted approximately 19 million SIMs, while 15 million had submitted their NINs before the directive came into effect on the 4th of April. We are supporting the NIMC with equipment for specifically distributed architecture for NIN verification to eliminate bottlenecks such that verification can happen at the rate at which we are submitting records. In general, on general traffic trends, we've seen average daily voice traffic decrease, while data traffic has increased slightly so far. We've also seen an increased demand in new SIM connections. You would appreciate that this is still early days, and we anticipate that you would want us to be more specific. However, it is important that we provide information that is useful, and we are unable to do this beyond what we've told you at this stage. It is also important just to note that the headline exposures and information we provided to help you with your analysis may not necessarily reflect how things will evolve in practice. It is still too early in the process to provide a more realistic trend. However, you are sure that management is on top of this issue on a daily basis and is doing what is necessary to mitigate the impact of this directive and to support the regulator to regularize registrations as quickly as possible. Moving on to item 6, which is how MTN Nigeria supports the Nigerian government's effort to speed up the NIN-SIM linkages. MTN Nigeria has been proactive in its support of the Nigerian government directed to speed up NIN enrollment and linkage with SIMs and we've lent into the policy. We have an increased capacity to support NIN enrollment across the country. We've obtained a NIN enrollment license to support the federal government efforts to ensure that every Nigerian has a valid NIN. And as a result, we've deployed more than 4,200 [ points ] of enrollment across the country to facilitate the NIN enrollment drive. We continue to expand this network to ensure that enrollment is within reach of all Nigerians. In addition, we provide hardware support to NIMC, specifically additional capacity and distributed architecture for NIN verification to eliminate the bottlenecks and accelerate the bulk verification of NINs collected. Engagements are also going on with the NCC, including through the industry body, ALTON, to ensure that we work together with the authorities to get as many people registered as possible. We have taken the following steps to ensure customers submit and link their NINs. One, regular NIN enrollment and link campaigns are provided to all customers via SMS and digital media channels. Two, we have promotions for bonus offers on NIN submission. Three, we have easy options to submit NINs using USSD, SMS, web, and various digital channels, including our chatbot. Four, banners and easy reference materials are placed on our website and on various social media platforms. Five, customer NIN education is placed on our website and we communicate this through FAQs also on radio and other media. Six, NIN submission information on call center IVR in the 5 major Nigerian languages and 7 ramping up devices for NIN enrollment across the country. I'll move on to item number 7, which is further information emerging from engagements with NCC and telecom industry bodies in Nigeria. I think it's useful to give some color into our ongoing engagements. MTN since the induction of the -- since the introduction of the initial directive in December 2020 has rallied the industry through the industry body, the Association of Licensed Telecoms Operators of Nigeria, ALTON to support the federal government's policy on SIM-NIN linkage project as reflected in the approved Revised National Identity Policy on SIM Card Registration. This was done with a view to ensuring decision-makers are kept abreast of challenges, particularly the [ NIN-SIM ] infrastructural challenges, which has impacted adversely the verification services. And the industry adopted a multi-pronged approach engagement strategy, which includes monthly progress reports to the Honorable Minister of Communications and Digital Economy, highlighting progress made on the project are requested for ministerial intervention on the various challenges. Weekly technical meetings with the NCC and the NIMC to address operational issues on the project. Periodic meetings with Honorable Minister, Heads of NCC and NIMC Executives of Alton and the CEOs of mobile network operators to address the major concerns, and one-on-one engagement by the CEOs with the Honorable Minister, the NCC, EDC, and the BG of NIMC. MTN has also held several direct engagements with the Minister and other decision-makers. This engagement has yielded results, including especially the extensions on -- in various agencies for the enforcement of the SIM-NIN linkage that has happened over the past year. The NIMC infrastructure upgrades, which requires voluntary funding remains a challenge as the needed funds are yet to be released. Notwithstanding, engagements are ongoing with the decision-makers in line with the overall engagement strategy. So again, we are on top of all developments. Perhaps the only surprise was the accelerated decision to issue the directive, which Ralph has indicated was brought on by a flurry of insecurity issues. I'll move on to my final topic, which is the SIM registration process and how we are mitigating the risks. As a reminder of our SIM-NIN registration process, the NCC changed the progress for SIM registration making -- making it mandatory to use a verified NIN for new SIM acquisitions and other SIM-related transactions such as SIM swaps. This new process requires or mandates that a maximum of 4 new SIM cards is allowed per NIN. This implies that customers can only have 4 new SIMs with 1 mobile network operator. Part of the process is that only certified outlets as certified by the NCC will be allowed to carry out SIM fills and activations. Agents that carry out these activities most have NIN, BVN, which is a Bank Verification Number and a Senior Secondary School Certificate as the minimum educational qualification. In addition to the above, we have enhanced our systems and put additional controls in place. These controls include electronic image matching, a live image is matched against the NIMC image and must return true. We have back-office eyeballing, which combines live image plus NIN image matching. Our back office team carries out a second label check on all SIM registration before the line is made active. We have quality assurance projects, consisting of periodic health checks on SIM acquisitions that are carried out. These controls help to improve the quality of SIM registration, and thus far, MTN Nigeria has over 30,000 certified outlets for SIM registration, and we will continue to expand this number. I'll take you most through the points, which I -- Ralph spoke to me -- talking about. I'll hand over to our Group's CFO, Tsholo to provide a little bit around the Group's context. Thank you.

Thank you very much, Karl. Good afternoon to all our investors and stakeholders. Just very briefly on implications and impacts on the Group overall, many of you will know that Nigeria is our largest opco and contributes about [ 35% ] to MTN's total service revenue -- Group service revenue. So the roll-through to Group is quite important. Based on what Karl has explained earlier, the impact on Group service revenue from implementation of the NCC directory is roughly about 3% on an annualized basis resulting from the suspension with outgoing voice services to the affected subscribers in Nigeria. Again, very important to reiterate the point made by Karl in terms of these being annualized estimates and there is a lot of work still to be done as will be discussed to mitigate the impact. So from a Group perspective, the overall impacts are relatively small at this stage, and, of course, we will continue to update all our stakeholders in relevant forums how this evolves. With that Group context, I'd like to hand over back to Ralph for concluding remarks.

Yes. Thanks very much, Karl and Tsholo for providing investors and stakeholders a bit more color on this important matter. Now before we move to Q&A, I just wanted to reemphasize a couple of points in terms of what we have shared. I think the first is to be super clear that we support the initiatives by the federal government of Nigeria to accelerate NIN-SIM registrations given security concerns within Nigeria. We think a much more secure Nigeria is also good for MTN and the broader Nigerian society. So I think that point shouldn't be lost in the context of this matter. The second is that the directive is for outgoing voice only. And just to give investors confidence or insight into how we manage the risks and compliance with regulation, and we do have on this call, Ferdi Moolman, our Group CRO and former CEO of MTN Nigeria, we did make a call out the evening to say you send outgoing voice calls, can we just make sure that it is not just circuit switch voice, but it's what do we think about voice over IP. And as Karl said, we've got clarity that it is outgoing circuit switch voice data services and SMSs, we could continue to provide services to our customers. So I think the point about our full compliance and full implementation of the directive and our abundance of caution in implementing the directive got us to call the NCC for the avoidance of doubt to think about what is in and what is out of the directive. So we have fully implemented the directive and got reassurance in writing about what services can carry on. The third is, as Tsholo has shared, she's financially framed at a service revenue impact on a pro forma basis, the impacts, we will provide more detail and color as we go along. Karl gave me some sense of the emerging trends around directionally what's happening to voice as we look at kind of daily recharges. But we will provide a lot more detail with the Q1 trading update for MTN Nigeria, which is on the 29th of April 2022. So there we'll provide not only quarter 1 results, but what are the trends we are seeing. We're also in the month of Ramadan in Nigeria. So I think investors must be -- need to understand that typically, in the month of Ramadan, we do see voice grow slightly softer. It's a seasonal trend that is embedded in all our results, but we'll provide as much color as we can there on the 29th of April. The fourth point I wanted to raise is, we are taking initiatives to support our customers to accelerate their linkages of their NINs to their SIMs. Karl gave some color on that. I think it's also important to note that we are very deeply engaged with NIMC, the Minister of Communication, Dr. Pantami. We're also engaged with the NCC in figuring out how we can support NIMC with some of the bottlenecks that they have with validation of NINs with support of hardware to ensure that we have a faster process of validation, as we send through the NINs that we receive through for formal and final validation. So with those as summary points, operator, if we can just hand over back to you, and we can take a couple of Q&As. I'll take the Q&As and direct them in the room depending on the question that gets asked.

[Operator Instructions] The first question comes from Cesar Tiron from Bank of America Merrill Lynch.

I have 4 questions if that's okay, but they're really straightforward. The first question, I just wanted to make sure I understand what is the percentage of the subscribers which we have built up that actually have a NIN? That's the first one. The second one, assuming they all want to register, how long will it take? Are we talking about weeks or are we talking about months in total? Third question, have you noticed any acceleration in the linkage of NINs and SIM cards over the past couple of days? And the fourth one, is there any execution risk. So, for example -- sorry to ask the question, but is there any risk that your system sells to detect that one subscriber doesn't actually have this linkage?

Cesar, usually, when we've asked you -- gave you a chance to ask one question, you asked many. So I think on the percentage of, I mean, Karl, I really want you to pick all the 4 questions, and I'm happy to support you here.

Yes, with pleasure, Ralph. The first question was how many subscribers have a NIN. On a broad basis, as of the time we suspended with all the clarifications around the diplomatic SIM card on a broad basis, approximately 19 million was suspended. The balance have submitted a NIN, which is associated with them. So 19 to 51 on an approximate basis is the number of subscribers. 51 being people that have NINs, 19 and some fractions, the people that don't have NINs. Now on how long it will take us to register. This is an evolving matter. Obviously, we've seen quite a surge in demand for people to register their NINs and the subsequent verification, which needs to happen. On top of that, we've seen a surge in demand in terms of growth connections for people who just want to register a new NIN. In the context of changing behavior of customers, it is currently difficult to predict that. And also we need to deal with certain limitations around the NIN-SIM capacity, which we are working with them to provide constructively. By the time we do our quarter 1 earnings release on the 29th of April, we will have enough statistical trends and a better understanding of the immediate expansions that are going on with the NIMC to predict that accurately, however, there's a good flow. The third question, I heard one part, which is the acceleration of usage, and I'm not quite sure I got the end of it. It was if you noticed an acceleration of the linkage in the past couple of days, of the usage by subscribers, you mean?

No, no, no. Of the linkage of the NINs with the SIM cards.

No, there's a significant amount of submissions through the various channels, and linkage is ongoing. And yes, obvious -- well, once your SIM card is blocked for making outgoing calls, we have a massive surge in demand. And, of course, the initial market surge will put disproportionate loads on the NIMC systems. So to answer transparently, yes, we did see a huge surge, both on the ground and through the electronic channels. Over time, as we start to provide linkage, we expect this to taper out, but it will still be significant for an extensive period of time. And on the execution risk, and your question, is it possible that any subscriber, one subscriber sneaks through that doesn't have NIN linkage. Let me be clear, we suspended following the regulation to the Spirit and the letter and seeking clarifications wherever there was any iota of doubt. And we suspended every SIM card according to directive for outgoing calls in entirety. Before we reactivate any such SIM cards, they have to provide a NIN, and it has to be verified by NIMC. So we've put several control systems in place to ensure that this -- there is no error on this. And we are very conscious and we have multiple layers of control, secondary checks and audits to ensure that we don't slip on this, which perhaps where we can speak to a bit later. So I'm quite confident that we don't have the risk of those things slipping through the cracks. And I'm very confident we've complied to the liver.

Yeah, maybe just to -- because I'm sure this question will come up as well on the registration. I think what we need to appreciate is that the bottleneck for SIM -- NIN-SIM registration is really NIMC, that's the validation, that's where there is a IT capacity bottleneck where we stepped into the bridge to say, how can we help even with our own hardware to improve the velocity of validations going through. That's why it's difficult to -- and we've seen some of your reports about estimation of time lines, how long will it take, I mean we're not going to do the guessing game here because the real issue there is that that's where the bottleneck will be. And the sooner we can work with the government and NIMC, which is Karl is very engaged in that. The faster we can actually get that capacity on the hardware side, the faster we can -- and I think by the time we come to the 29th of April, we're able to provide you more context, particularly around what have we been able to discuss with NIMC or not, because that to me is the real determinant of acceleration. And on the fourth point of risks, Ferdi, do you want to comment?

Yes. Thank you. Good afternoon, everybody. So just to give you a sense of context, I mean, this is not the first time that the opco had to go through some other suspension process. So there are quite a number of standard controls and procedures that have been put in place as Karl can see it. I thought I would perhaps just highlight two of them just to give you a view. So there is a process in the back end now, where we will go and look at the data that is normally created after the call to make sure that subscribers that should have been suspended have not made any call. And then we also use our internal quality team to do an independent review once suspension has taken place to make sure that we fully comply with all the requirements. Historically, also, we have gone through the suspension licensing that have been linkaged. We've always engaged with NCC, the regulator the moment will pick it up, and like always understanding that these are complex issues, and we've always dealt in a very responsible manner.

Thanks, Ferdi. Operator, back to you.

The next question comes from Preshendran Odayar from Nedbank.

I've got three quick ones. Firstly, in your announcement, you mentioned this is the first phase. Do you have any inkling of what the second phases will entail? Second question is, can you just remind us what is the -- I mean, I fully appreciate that you guys have probably learned the hard way about making sure that you're all compliant, but what are the signs for non-compliance per subscriber? And then the last one, maybe I've been watching too much of CSI or blacklist on TV, but if the intention of NCC is to prevent kidnappers using the SIM cards. And is that the reason why they're only barring outgoing calls because these traditionally get used as Vodafones, can -- I mean, can your technology actually track the baddies if they use it for data or any other services that you still have active on these SIMs?

Ralph, I think we'll...

Yes, I'll take those, Karl.

Okay. Thanks, Preshendran. The first question was, this is the first phase. My view and I think the view of most of the operators in this industry is this first phase was implemented to ensure that they face load on the public and on the systems to get new registration up to speed on a large scale. There is no prior indication in terms of what the second phase will be. It could be suspension of data. It will be complete suspension of the SIM cards, but there is no indication of that yet. But I think we have to look at things on balance. From 2020 December, when the Honorable Minister initially issued this directive, we've seen a significant amount of extensions. And that is precisely for the purpose to allow people as much time and reduce the load on the systems for them to get to the point where we are where we do have 51-odd million subscribers that have NINs. I think we'll have quite a bit of time, including the scale up of the capacity of NIMC for the majority of the subscribers to get their NINs before any second phase is implemented. But to answer unequivocally, there is no indication of a second phase. The second question was fines for non-compliance. The fines -- first of all, let me put it into context. We are, of course, unfortunately, the company that had the biggest fine due to SIM registration in 2015. For absolute clarity, the reason why we were fined in 2015 is we received a written instruction specifically detailing or requesting us to delete subscribers which had registration issues. So fines will only come after non-compliance on a written instruction to delete customers. The fines for non-compliance remains the same as it was in 2015, which is [ NGN200,000 ] per subscribers back then, that was an odd $1,000 now due to currency devaluation, it's $400-and-something odd. The next question is if the intention is to prevent kidnappers -- is the intention [indiscernible] kidnappers, is that the reason for outgoing calls, et cetera. I think, look, the Honorable Minister is responsible for identity management registrations, et cetera. And his role -- and I think his intention is to ensure as many Nigerians as possible get registered. The decision on how that information is used is really left to the security agencies. We have all the standard set of data, which can be used with the right legal framework and written request to support security agencies in their job. But it wouldn't be for me to speculate beyond the fact -- of beyond what the Honorable Minister has stated. And that he wants every Nigerian and every SIM card that is issued in Nigeria to be associated to a national identity number. Thank you.

I mean, maybe just to top entail to your question, Presh, I mean, I come back to the point around phasing is that if you're binding constraint is a government agency in terms of the validation, and I say this with the full respect of NIMC themselves, they do have the capacity constraints. Any phasing in terms of either other services or the time line, it's really immensely capacity issue on the ability to validate, so that's where the binding constraint I would argue would be. And as I mentioned earlier on, I think it will be important to update investors of what is happening in terms of NIMC's own capacity what the industry has done to enable it to have more service, et cetera, to be able to go through that. On your question, I think Karl answered your second question on fine for non-compliance, but I thought it would be helpful for Ferdi to cover 2 points. One is just to remind you, the process in 2015, what happened there, so it will be absolutely super clear. But secondly, what is the notification process because there are steps that NCC follows on non-compliance. Now, Ferdi want to make and provide a bit more color on this.

Thanks so much. I think I'll start with the process that NCC follows. Firstly, the NCC doesn't just issue fines. In the event that they identify non-compliance, there's a standard process clearly defining the regulation that they follow. That process principally allows for communication with the operator to understand why there was non-compliance, and also to give our operator opportunity, a second opportunity to fully comply. So there is a process that is allowed in the event of non-compliance that you can follow in any compliance. The second issue is more in terms of 2015. The reason the fine was issued in 2015 was, in fact, we have gone beyond that process at some point in time, and the regulator instructed the suspension of about if I recall correctly, 5 million odd subscribers. And the regulator basically said that these subscribers were not suspended, and hence, the fine was issued. So what is extremely important in this case is to comply with the regulation, which the opco has done. I think what also gives us some sense of comfort that the initial letter, as Karl has said, and we also indicated that was received by the NCC, we went there for clarity in terms of bad X related to my [indiscernible] 100% ensure that we comply.

The next question comes from Jonathan Kennedy-Good from JPMorgan.

Just a brief one on Nigerian revenue guidance was recently upgraded, if I'm not mistaken, to a minimum of 20% over the medium=term in Naira. How would these developments affect that guidance, if at all? And then secondly, in other markets where we've seen similar developments, albeit they are somewhat different. We've seen competitors drop pricing to try and attract subscribers that need to re-register. I mean, is that something you've observed from competitors yet or are you planning to do anything like that to protect your base?

Yes. Maybe I can start, Jonathan on that, and Karl can talk. On the service revenue guidance, I mean, the guidance remains in place. We've had 4 days of this NIN-SIM registration. We've seen how our Q1 has performed. Obviously, we can't talk about how Q1 has done that can be seen as selective disclosure, but we'll fully disclose at the end of the month, 29th of April. So the guidance remains in place. We will work through seeing how the recharge behavior, the gross connections perform over the next couple of weeks. But there isn't, as we sit right now, any sort of changing the guidance. And I think it's important to note that for us, the guidance is a multi -- is a medium-term guidance. So when you think about guidance, we think 3 to 5 years what we should get. So the next 2 months, I think will be important to see how we get through it. And as I said, I'm sounding like a stuck record here. I think if the NIN-SIM capacity to validate is materially improved, I think things can turn quite quickly. Karl can probably provide a bit more color on the pricing of what could happen here. But I think what is also an interesting point to reflect on what happened when we weren't able to actually bring on new subscribers way up to the April last year is we saw a relatively disciplined pricing behavior. And remember, there's a voice price rule in Nigeria as well. But Karl, do you want to build on that second point?

Yes. Thank you, Ralph. I think our first focus in terms of protecting our base market share is on the ease of NIN submission and verification. And as Ralph has clearly indicated that is very much subjective to the capacity of NIMC. We will continue to focus on the ease of the customer journey to submit and verify NINs, while, of course, ensuring that we have as many points as possible for registration of these subscribers. We do not follow a race to the bottom of the market, but we'll consistently remain competitive on an overall basis with market development. That's on top of Ralph's comments around the outlook. This is a significant challenge, and it's taking management focus because we think it's important for the entire team to be involved in this. But our consistent strategy around Ambition 2025 continues to be executed in parallel to this. So we will continue to deliver value around connectivity and the progress around Ambition 2025. I hope I addressed your question, Jonathan. Thanks.

The next question comes from Kuda Kadungure from Kela Securities.

Just 2 questions from me. The 9% figure you mentioned as the outgoing revenue that's as a percentage of Group, does that include the impact on incoming revenue from other local operators? And then the second one being with regards to the applications that won't be -- that it's due, is there a risk of an application failing or getting rejected? Yes, those are my 2 questions.

Tsholo, do you want to take the first one? And Karl, do you want to take the second one?

Yes. Just on the first one, I mean, that 9% is actually based on outgoing voice services specifically not incoming.

[ I could have modeled ] the impacts of incoming, we just took a most conservative view and just saying all outgoing and not missing of or any incoming.

Okay, all right.

Karl.

Yes. If I understood the question, Kuda, look, there was an failing and getting rejected. Yes, there is. It's part of the ongoing process, which we've had and since we started reconnecting SIM cards as an example in April 2021. So applications go into the NIMC system. And if there is an accepted load, which, of course, in the initial stage, there will be, they get rejected or no response arise. And then, of course, and the verification process have to go through and have to pass successfully before we can proceed with associating the NINs M or these part subscribers with MSISDN.

Operator, back to you. Maybe we take the last set of questions?

The next question comes from Nadim Mohamed from SBG Securities.

Just 2 clarification questions on Karl's section. So one of the things that was mentioned was that subscribers will be allowed to link 4 NINs to the -- sorry, 4 [indiscernible]. This is one that's applied retrospectively, and does it affect a reasonable portion of your base? And secondly, if I heard correctly, there was some additional requirements on the agent network like having a BVN, et cetera. Just was wondering what percentage of your agent network is currently compliant and what the plans are to make them more compliant?

Karl, do you want to pick that up?

Yes. Thank you, Ralph. The audio was a little bit cheeky, but I know the question was around 4 NINs per -- sorry, 4 telephone numbers per network for the NINs. So I'm not sure if I'm answering your question because I didn't hear you quite well, but we have systems in place to ensure that customers cannot associate more than 4 NIN-SIM on the MTN network for a single name. And that those systems almost hardware is such that before you can register and in an activated it checks if there's anything more than 3 registered, if it's 3, the last one can be registered, if it's 4, it [ would be quite ]. So you have to bring another NIN, another person that's come to register for it. As I didn't hear the question 100%, clearly, I'm hoping that I've answered the question. On the Asian network, look, since April 2021, I think it was the 27th of April, the regulations around the agents that are allowed to perform these services have been put in place. And they must have the bank verification number and NIN themselves and must have secondary school -- senior secondary school certificates, and we put them through training around compliance. So our agents that are operational in the field are meeting the standards that our outlets are certified by the NCC. We get our compliance function to regularly check and audit our compliance around the space. We keep good records of all the documentation, qualifications, et cetera, for these agents. So it's not a new thing. It's been in place since April, and we are scaling it up, of course, to soak up on the capacity demand, but we are well structured and compliant on this field. Thank you.

Thank you so much. I just -- yes, I was just going to say on the first question, I was just wondering if it's being applied retrospectively or is the performance per SIMs per NIN already in place?

It's already in our pipeline. It's not retrospective, Karl, right?

No, it is not -- that regulation has also been in place since the revised registration policy. So it is valid from when we started registry from April 2021 going forward. All subscribers registered before then are not required to comply with the 4 NINS per [indiscernible].

Thank you so much for the clarification. Yes.

You asked an important point of clarification because I mean, I think that could have been rated. There's going to be an impact for those who have, let's say, [ 8, 9, we have 4 ], and does that actually impact revenue. I mean maybe just on that point, I mean, this we self-implemented as part of managing SIM registration risks in across the markets that where there are no guidelines around maximum number of SIMs, particularly markets, let's say as a weaker process, et cetera. But we are implementing self-imposed limits on the number of SIMs just to mitigate SIM registration risk. So we take one last set, of course, to ensure that those are in the same time zone as those can have a Friday weekend.

Okay.

Can you give us the last questions. We'll be back again at the end of the month. So Thato is around me as well.

The final question comes from Admire Mavolwane from Terra Partners.

I'm just reading the SIMs notice that was published. It's just that the 47 million subscribers represented 67% of the subscriber base and 76% of service revenue. That would imply that the unregistered SIMs have basically lower value -- low-value subscribers, because I would assume that if a senior subscriber wouldn't be able to do the process in time. But could you just clarify that 9% in view of the whole value situation of these subscribers in terms of as well, how they will impact when like our mobile money savings? Then the second question is to do with the security situation in the North and Northwest of Nigeria. Have you been asked to restrict services or any other measures that could have been impacted because of the security situation there in terms of your business?

Yeah, I mean, Admire, thanks very much for your questions. I mean, Karl, do you want to take them or do you want us to give a view on that?

No, with pleasure, thank you, Ralph. I think, Admire, I'm not sure I heard the right pronunciation. Look, we must provide information on the noncredit basis. So we'll stick to what we're going to sense, but I'm sure you can reduce from the numbers yourself. And what it means in terms of the segments that are most affected. Now there are many reasons to get a national identity number. And one of them is, for example, to renew your passport. So you would automatically expect that a lot of the people that will be the first to get NINs would be people in major urban centers that have multiple reasons to get a new NIN in place. And that the bottom of the pyramid will generally tend to be the loss on the line to get NINs registered. Beyond that, as a management team, we're very focused, we segmented in minute new detail exactly where our subscribers are, what segments they belong to, their data usage, voice usage, smartphone penetration, et cetera, et cetera. But I think we'll disclose more information to all investors and analysts at the same time at the end of -- when we report on quarter 3. On the second question, right now, there are very few security restrictions in place. There are quite a few somewhere between October and December last year, a lot of those were lifted when the security agencies managed to arrest the activity of terrorism/banditry that was ongoing. There are very few in place, and it's hard to predict just as this train incident wasn't predicted when the next set of security incidences might occur and we might receive written instruction to shut down for security operations. We comply with these, and as long as we see them in the correct format from the regulator, and as the license requires, but right now, there aren't major network restrictions for security reasons, but we don't know how that's going to change in the future. Thank you.

Well, thanks very much. It's coming pretty close to the hour. So maybe just to close, I thank all the investors and stakeholders who have joined this call. I mean from an MTN Group point of view, we feel it's important to keep you updated even if we don't know all the facts and the situation is evolving, but I think it's important -- we found it's important to talk to you much earlier than waiting for Q1 trading update. So we can tell you what we know and what we don't know. And I trust that this call has provided a bit more color. I know you wanted more numbers, but you will get a lot more detail, both at the 29th of April Q1 trading update for MTN Nigeria, 6th of May 2022 trading update for Group. We are beyond giving you how the business has progressed, service revenue, EBITDA margins, and CapEx. We will provide the trends post this NIN restriction to outgoing voice, what trends are we seeing in recharges, what is the behavior we're seeing with voice, what's happening with data. And as I mentioned earlier on, when we provide you with those trends, please take into consideration that we are in the month of Ramadan. And in Nigeria, there's generally a softer trending during the month of Ramadan as our colleagues observe the holy month, but we will provide as much as we can on gross connections, recharges, underlying data, and voice. And to Jonathan's question, which I'm sure many of you are thinking, and I'm not brave enough to answer this. I mean, I'm sticking with your guidance. And as I said, the guidance is held, and any other information that we can provide, we will let you know. And importantly, what we'll also provide in the call is what we've done with the government with the Minister Pantami, [ NCC offshore and MC ]. That constraints on validation is a real bottleneck towards timing. So we won't guess how long it will take on this call because actually nobody knows. But we do know where the bottleneck is generally. And as long as we are fully compliant and going through the processes, present bottleneck remains, it does become a binding constraint. So we're super focused on finding ways to support the government NINs in particular to capacity itself to more rapidly do the validations because that will give us a better sense of timing. So, Jonathan, maybe we'll have something to tell you of those around the timing. But having said that, thank you so much for joining. Any other questions you have that we can share kind of without selective disclosure, please pass them on to Thato and Chima. Chima is in Nigeria. Thato is here, obviously, the Group. We thank all of you for joining us and have a wonderful weekend. Thank you so much.

Thank you very much, sir. Ladies and gentlemen, that concludes today's conference. Thank you very much for joining us. You may now disconnect your lines.