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Johannesburg - Nigerian regulators’ decision to extend a November 16 deadline to fine MTN R74.8bn suggests discussions are making headway, says an analyst.
The Nigerian Communications Commission (NCC) issued a R74.8bn fine to MTN last month for failing to disconnect five million unregistered SIM cards in a timely manner.
The NCC then set a deadline of November 16 for MTN to pay the fine.
But MTN, which has 62 million subscribers in Nigeria, said in a market update on Monday that “Nigerian authorities have, without prejudice, agreed that the imposed fine will not be payable until the negotiations have been concluded”.
MTN therefore appears to be making headway in its discussions on the fine in Nigeria, said managing director of technology research firm World Wide Worx Arthur Goldstuck.
“What it suggests is that the regulator is not being hard-nosed about the process,” Goldstuck told Fin24.
“The fine itself might have been excessively hard-nosed but it appears that in the discussion there is a little more leeway, otherwise they wouldn't have given the extension for the discussion.
"What it further suggests is that the regulator is wanting to see what further steps MTN will take to address the lapse of governance that led to this situation,” said Goldstuck.
The large size of the fine could also be a move by the regulator to prove it has “muscle” rather than finding additional sources of revenue for Nigeria amid declining oil prices, added Goldstuck.
"If they were just looking for the money, they would have gone for a smaller amount. It wouldn't have led to protracted negotiations,” Goldstuck told Fin24.
"It's certainly a positive sign and I expect their share price to recover a little on that news, because if they weren't going to budge, today would have been D-Day,” Goldstuck added.
MTN’s share price in Johannesburg was up 0.05% on Monday morning to R145.07.
Engagement continues
Meanwhile, MTN’s engagement with the NCC continues, said the company’s executive for group corporate affairs Chris Maroleng.
"It would appear on the face of it that the deadline will not apply until of course we have arrived at a mutual agreement,” Maroleng told Fin24.
"We will wait on the authorities in Nigeria to give us a sense of where and how they expect this fine to be settled,” said Maroleng.
Maroleng further told Fin24 that MTN's executive chairperson Phuthuma Nhleko has been "engaged with authorities in Nigeria over the past few days”.
Nhleko took over the reins at MTN after the company’s group chief executive officer Sifiso Dabengwa resigned last week amid the Nigerian fine.
He also stepped down after almost a fifth of the company’s market value was wiped off, days after the fine was announced.
In the meantime, the Johannesburg Stock Exchange is also investigating the manner in which MTN announced its fine to shareholders and possible insider trading.
