MTN. (Duncan Alfreds, Fin24)
Johannesburg - Mobile network MTN [JSE:MTN] has moved to defend the R1.32bn it paid to advisers to help it with negotiations over a multi-billion dollar fine in Nigeria.
Late last year, Nigerian regulators slapped a $3.9bn fine on MTN as the mobile network failed to disconnect about 5 million unregistered subscribers in a timely manner.
In June this year, negotiations led to a reduction in the fine to 330bn naira ($1.67bn).
The lowered fine came after MTN moved to hire advisers such as former US attorney-general, Eric Holder, to help negotiate the settlement.
Holder - who served as US attorney-general from 2009-2015 - has previously helped the likes BP with its $18bn fine for the Horizon oil spill in 2010.
MTN, in its report for the six-months ended June 30 2016, revealed the full costs for its advisers.
“During the period, R1.32bn costs were incurred on a range of professional services relating to the negotiations that led to a reduction of R34 billion in the Nigerian regulatory fine to 330 billion naira (US$1,671 billion, using the exchange rate prevailing at the time),” said the company on Friday.
“The board has exercised its judgement and approved the quantum of the professional fees incurred taking into account global benchmarks and the value delivered culminating in the final settlement of the Nigerian fine,” MTN said.
Subsequently, at an interim results presentation on Friday, MTN’s executive chairperson, Phuthuma Nhleko, said the R1.32bn amount was paid to legal advisers from South Africa, Nigeria and the US.
“You have to look at it in context and what it really means in terms of the outcomes,” Nhleko said at the briefing, according to the Sunday Times.
Fine’s impact on MTN
Meanwhile, last year’s Nigerian fine has continued to have a ripple effect on MTN.
In its interim results on Friday, MTN said the regulatory fine’s re-measurement impact amounted to R10.5bn.
The company also reported a loss per share of R2.71 while its group subscribers remained flat at 232.6 million from 31 December 2015 as it disconnected 18 million subscribers across the group to comply with SIM registration requirements.
The company also reported that its revenue increased to R78.8bn across its group operations while its earnings before interest, tax, depreciation and amortisation fell 3.3% to R29.2bn.
MTN's share price in Johannesburg also fell almost 3% on Friday to R129.82 after its interim results were released.