MTN's Nigerian woes don't seem to go away
JOHANNESBURG – MTN, Africa's biggest telecommunications operator, met with the Central Bank of Nigeria (CBN) in an effort to end troubles in the country that have wiped off billions in value according to reports on Friday.
MTN gained 3.5 percent on the JSE in early trade on news that chief executive Rob Shuter had met CBN governor Godwin Emefiele in Nigeria on Thursday to discuss the $8.1 billion (R115.70bn) fine for allegedly repatriating money illegally.
The CBN also met the four banks accused of facilitating the transfers.
However, the share lost ground and closed 2.17 percent lower at R85 a share.
“The share price reacted positively in the morning, but has turned negative since then, as investors remain sceptical of a reasonable outcome,” Cape Town-based portfolio manager Peter Takaendesa at Mergence said on Friday.
There were also reports on Friday that MTN Nigeria has sued the Nigerian government to the tune of 3 billion Nigerian nairas (R11.7 million) to challenge the legality of allegations.
The embattled company filed a lawsuit at the Federal High Court in Lagos, demanding the 3bn nairas for damages and legal costs.
A company spokesperson said on Friday that the company noted the reports, saying it dismisses the allegations and claims by the Nigerian authorities.
“MTN Nigeria continues to engage with the relevant Nigerian authorities to ensure a mutually acceptable resolution of the matter with the CBN, as well as that with the attorney-general of the Federal Republic of Nigeria,” the spokesperson said.
MTN has lost 20 percent of its value since late August when the CBN alleged that the group flouted currency regulations. The Nigerian attorney-general also gave notice that he aims to recover $2bn (R28.57bn) of taxes relating to the importation of foreign equipment and payments to foreign suppliers since 2008.
The South African Reserve Bank (Sarb) warned last week that MTN’s troubles in Nigeria were a threat to the country’s financial system. Sarb said in its financial stability review that if MTN was forced to pay the CBN fine, the group might struggle to pay off its debt, thereby heightening risk to the country’s financial system.
In 2015, MTN was slapped with a $5.2bn fine for missing a deadline to disconnect unregistered subscribers in the country. The penalty was later revised to about $1bn on condition that MTN sell shares in its Nigeria unit in Lagos.
Last month, MTN said it had added 2.5 million subscribers to 225.4 million in the third quarter. The Johannesburg-based firm also said that it had increased sales from operations by 10 percent from a year earlier.