SA ‘watching MTN’s antics’

A pedestrian checks his mobile handset as he passes a giant logo outside the headquarters of MTN Group Ltd. in Johannesburg, South Africa. Photographer: Nadine Hutton/Bloomberg

A pedestrian checks his mobile handset as he passes a giant logo outside the headquarters of MTN Group Ltd. in Johannesburg, South Africa. Photographer: Nadine Hutton/Bloomberg

Published Nov 5, 2015

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Johannesburg - Deputy President Cyril Ramaphosa yesterday sought to distance the government from suggestions that Pretoria would come to MTN’s aid over its $5.2 billion (R71.7bn) fine in Nigeria for violating that country’s laws.

However, he acknowledged that fallout from the dispute could affect South Africa.

Ramaphosa told Parliament yesterday that they were keeping a close eye on the developments in Nigeria and wanted to see how the mobile network operator would respond.

“We will obviously be taking note of what is happening with a view of seeing how the company involved responds and reacts in this matter,” he said.

“We would like our companies to comply with the laws and regulations of countries where they operate.”

However, he did not indicate whether they would intervene at some point to help MTN.

“If this fine is indeed imposed as it is, it is going to impact on South Africa as well, as our revenue fortunes from a taxation point of view are going to be lower,” he added.

Reluctant

Ramaphosa, who was replying to questions in the National Council of Provinces, was the first high ranking official in the government to speak out on the MTN debacle in Nigeria.

His comments were in response to follow-up questions asked by IFP MP Mntomuhle Khawula.

Ramaphosa was the chairman of MTN from 2002 until May 28, 2013, when he stepped down from the company’s board after being elected as ANC deputy president in late 2012. He was also the founder and chairman of the Shanduka Group, which in 2012 bought a minority stake in MTN Nigeria.

Asked by the DA what action he would take to assist MTN in Nigeria over the massive fine, Ramaphosa did not indicate any sort of involvement or intervention by the government.

“As I understand it, this one has to do with the issue of Rica. We were going through the same process here,” he said, adding that it was important to register SIM cards to curb crime.

Ramaphosa did not indicate whether there would be a direct intervention by the government. However, South African authorities may be reluctant to confront their Nigerian counterparts following a series of diplomatic spats that have soured relations between Africa’s two biggest economies.

The most recent occurred in April, when Nigeria’s government ordered its two most senior diplomats in South Africa to return home for consultations, following a wave of attacks against immigrants, including Nigerians, in Johannesburg and Durban.

Over the top

“South Africa does not have a track record of defending its national company champions internationally,” said Nic Borain, a political analyst who advises BNP Paribas Cadiz Securities. “On the face of it, this fine seems seriously over the top. “Ramaphosa’s words about the issue seem weak as they veer too much on the side of caution.”

Athol Trollip, a lawmaker for the DA, said: “I believe the South African government should be doing more than having a watching brief on what MTN does.”

He added: “They should give leadership on this.”

In another development, Renaissance Capital (RenCap) said yesterday that MTN was trying to reduce the $5.2bn fine imposed by Nigeria’s telecoms regulator and it was considering borrowing money from banks to help settle the penalty.

“MTN is pushing to reduce the fine by 60 percent to 80 percent,” Adesoji Solanke, RenCap’s head of research in Nigeria, said in a note to clients, citing a bank he did not identify.

* Additional reporting by Bloomberg

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