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MTN is said to close in on $800m Nigeria settlement

Nov 14 2018 14:42
Emele Onu and Loni Prinsloo, Bloomberg

MTN is close to reaching a $800m settlement with Nigerian authorities over a claim it illegally transferred $8.1bn funds out of the country, according to a person familiar with the situation.

A deal hasn’t been signed and could yet fall through, said the person, who asked not to be identified as the talks are ongoing. The story was first reported on Wednesday by Lagos-based Punch newspaper.

“MTN Nigeria continues to engage with the relevant Nigerian authorities to ensure a mutually acceptable resolution of the matter,” a spokesman for Africa’s largest wireless carrier by sales said in an emailed statement on Wednesday. The Nigerian central bank and presidency declined to comment.

MTN shares jumped after the Punch story was published, before losing ground to trade 0.4% higher at R81.40 as of 13:58 in Johannesburg. The stock has declined more than 25% since the allegations were first made in late August.

A decision to transfer $800m would come just two years after MTN paid $1bn to Nigerian authorities as a penalty for missing a deadline to disconnect unregistered subscribers. That levy, which was also substantially reduced from the original sum, led to MTN’s first-ever loss in 2016. The company is also accused of non-payment of $2bn in taxes.

“It’s very important the parties reach a quick resolution because the problem gives the wrong signal to willing investors,” Gbenga Adebayo, chairman of the Association of Licensed Telecommunications Operators of Nigeria, said by phone from Lagos. There are many African countries that are investor friendly and are also craving for foreign investment.”

MTN pledged to list its local unit in Lagos as part of a settlement of the earlier penalty from 2015, although those plans are currently in doubt amid the current impasse. The stock is down by more than 50% since the start of that first dispute, which also led to an overhaul of management and the arrival of Chief Executive Officer Rob Shuter from Vodafone.

MTN has more than 64 million subscribers in Nigeria, making Africa’s most populous country its biggest market.

“If the $800m is a fine, it’s negative because it’s a significant expense for a company that says it’s done nothing wrong,” said Ruhan du Plessis, an analyst at Avior Capital Markets in Cape Town.

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mtn  |  mtn nigeria fine
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