MTN gets time for Nigerian deal

A Nigerian judge adjourned a hearing on Wednesday over an $8.1bn dispute between SA telecoms giant MTN and the country’s central bank until January 22.

A Nigerian judge adjourned on Wednesday a hearing over an $8.1bn dispute between SA telecoms giant MTN and the central bank until January 22.

The dispute is over the transfer of $8.1bn of funds, which Nigeria’s central bank said the company had sent abroad in breach of foreign-exchange regulations. MTN has denied any wrongdoing.

Nigeria is MTN’s biggest market, accounting for a third of the company’s core profit.

The adjournment came at the request of the central bank and MTN lawyers.

“We are still making moves towards an out-of-court settlement,” a central bank lawyer told the court.

An MTN lawyer said discussions were ongoing.

JPMorgan said in a research report in November that it had an “underweight” recommendation on MTN’s shares.

The US bank said a best-case scenario would be a withdrawal of the $8.1bn with no penalty and no restrictions on future dividend repatriations.

“If the central bank’s claim is withdrawn with no restrictions and no penalties, we see scope for MTN rerating towards R100 a share in the near term.”

JPMorgan said its base-case scenario assumed a $500m settlement, including legal costs, for both the central bank’s $8.2bn claim and a $2bn tax claim by the attorney-general. “A downside case would emerge if the central bank settlement was more than $500m,” it said.

The claims rocked MTN’s share price, which fell from R107.34 in late August to below R70 in mid-September. The stock closed at R85.94 on Wednesday, 2.8% up on the day.

MTN has 55-million subscribers in Nigeria, where it plans to launch mobile money services as part of its efforts to be the biggest provider of mobile financial services in Africa.

The Nigerian central bank has agreed to allow mobile operators to act as paymentservice banks. /Reuters, with