Johannesburg - MTN - Africa’s largest cellular company by subscribers - continues to take a beating as it seeks to fend off a $3.9 billion fine.
The operator was last year fined $5.2 billion - a record amount - by the Nigerian Communications Commission for failing to disconnect users with unregistered SIM cards by a set date. The penalty was later cut by 25 percent after weeks of talks.
Despite the company’s closer interactions with the NCC, a move that followed the resignation of Sifiso Dabengwa as CEO and him being effectively replaced by non executive chairman Phuthuma Nhleko, the company has failed to settle the issue.
MTN has now been given until March 18 to try to reach a settlement over the fine, which equates to more than twice its annual average capital spending over the past five years. The fine also amounts to nearly 17 years’ worth of revenue from Nigeria, MTN’s largest operation with 62.5 million subscribers.
Should MTN and the NCC fail to reach a settlement by March 18, the matter will go to court, MTN said in a statement towards the end of last month.
Also read: Nigeria ‘open’ to deal with MTN
In the meantime, however, its shares have taken a beating and have now dropped to a near five-year low. At noon, they were trading at R126.13, a 0.37 percent on the R124.50 opening price.
However, this is a far cry from the R206 the stock was worth in September 2014.
MTN’s status as one of the most valuable 500 brands in the world, as Brand Finance no longer ranks the home grown company in its latest report, released earlier this month. Last year, it was listed as the 302nd most valuable company, having slipped from 240 in the 2014 report.
However, MTN is not taking the fine lying down, as the FT reports it has engaged Eric Holder, a former US attorney-general, to aid it in its fight.
The FT says Holder made an initial visit to Abuja last month to plead with senior Nigerian officials on behalf of the South African telecoms group, according to people familiar with the situation.
“His experience as attorney-general in dealing with corporates with a lot of problems was interesting to MTN,” said one person close to the negotiations, according to the FT. The person said the company hoped Mr Holder’s “experience and stature could inject some balance into the equation”.