On Friday, a dispute over right-of-way fees between MTN Nigeria and the Osun state government hogged the headlines. The Osun State government claimed MTN owes ₦945 million in right-of-way fees—payment for laying high-speed internet cables.
That demand was based on a calculation of ₦3,500 per linear meter (the maximum fee applicable) of fiber-optic cable laid. The government also imposed a ₦100 million fine.
MTN’s letter to Osun State, published by several publications, provides a glimpse into what appeared to be a shakedown. Several people with direct knowledge of the matter say the dispute, which the telecoms regulator is now mediating, is more nuanced.
Five people with direct knowledge of the matter say the government’s demands are rooted in the belief that MTN Nigeria and O’odua Infraco Resources Limited acted in bad faith in a complex web of partnerships that began in 2022.
A September 2022 agreement between O’odua Infraco Resources Limited and MTN is at the heart of the dispute. The agreement gave MTN an “indefeasible right of use” to lease O’odua’s fibre ducts—protective housing that prevents vandalism and wear and tear—to lay fibre optic cables. As part of that agreement, MTN paid O’odua right-of-way fees.
The government contends that O’odua was not authorised to collect fees on its behalf. It also argues that it was not a party to the agreement between MTN and O’odua and is not bound by it.
“In addition to clause 6.13, the Service Provider (O’odua) shall also provide a no-objection letter from the Federal Ministry of Works and Housing and the relevant state authorities stating it is not opposed to its entry into this agreement with MTN,” read an excerpt from an advance copy of a press statement citing portions of the agreement seen by TechCabal.
Three people familiar with the government’s position said the fees paid by MTN represent ₦650 per linear meter, less than half the minimum ₦1,300 Osun state charges. They also claimed the government never received those payments.
“The agreement purportedly executed between O’odua Infraco and MTN on 22nd September 2022 far predated the existence of any purported contract for Right of Way between the Osun State government and O’odua Infraco, which was purportedly executed on 6th March 2023,” said an advance copy of an Osun state government press statement seen by TechCabal.
MTN did not respond to a request for comments.
O’odua Infraco did not immediately respond to a request for comments.
Osun state and right-of-way fees
The press release references Osun State’s decision to cancel right-of-way fees in March 2023. At least two government officials who asked not to be named as they were not authorised to speak on the matter claimed the 2023 cancellation was based on promises by telcos and infrastructure providers to provide internet to underserved areas. They claim infrastructure providers reneged on the agreement.
Right-of-way fees, an important source of revenue for struggling states, are cited as one reason telcos have struggled to provide high-speed internet nationwide. While the Federal Government recommended that states charge ₦145 per linear meter, that recommendation has been difficult to enforce.
Some governments believe telcos should consider the fees as a necessary cost of doing business, arguing that many telcos will not lay fibre-optic cables outside of commercial areas.
MTN, which has suffered from the naira devaluation and record inflation in Nigeria, will be reluctant to pay these steep fees. Yet the government’s position seems to be informed by the idea that there’s no point in canceling right-of-way fees if telcos will simply pay them to third parties anyway.
