Shares suddenly plunge 20%
MTN’S PLANNED listing in Nigeria has come into question after the country’s central bank slapped the group with an $8 billion (R118bn) bill for money it says the firm repatriated illegally, setting the stage for a drawn-out legal wrangle.
The company shed nearly R6bn of its value on the day as the share price of Africa’s biggest mobile company plunged more than 20 percent yesterday after the Central Bank of Nigeria (CBN) accused the firm of having repatriated dividends illegally between 2007 and 2015.
The CBN also handed down multimillion-dollar fines to four banks, including Standard Chartered and CitiBank, for alleged financial infraction over the MTN matter. MTN said it would not easily give in to the central bank’s demand that it pay back the money.
“MTN Nigeria strongly refutes these allegations and claims. We will engage with the relevant authorities and vigorously defend our position on this matter and provide further information when available,” MTN said.
The Nigerian Senate in November exonerated MTN Nigeria of repatriating $13.2bn to its parent company in South Africa between 2006 and 2016. The allegations first emerged in 2016.
Tilewa Adebajo, chief executive of CFG Advisory, said MTN was in big trouble as the central bank’s report carried more weight than that of the Senate.
“The central bank is the primary regulator, while the Senate is the legislative body and does not have regulatory or prosecution powers. We now have to look at the Senate’s clearance with a pinch of salt,” Adebajo said.
“The direct impact is that MTN was supposed to conclude a listing at the Nigerian Stock Exchange and that clearly would now be stalled. The stock market has been anticipating the listing of MTN to boost the viability of that market.”
MTN’s headache in the West Africa country has made news headlines for the better part of 2016 and last year.
In 2015 the group was hit with a $5.2bn fine by authorities for its failure to cut off 5.1 million unregistered SIM cards as required by the country’s laws. In December 2015 the fine was reduced to $3.4bn, then cut further in June last year to $1.7bn. The fine was largely responsible for the $200m loss reported by the group in 2016 – MTN’s first ever.
Nishlen Govender, a portfolio manager at Citadel, said MTN’s Nigeria dilemmas would weigh on the company’s share price for some time.
“The timing of this seems convenient given various political factors, notable of which is the strong stance taken by President Buhari’s government on corporate malfeasance leading up to the 2019 elections,” Govender said.
Nigeria, Africa’s most populous country, is the company’s largest market, where it now has more than 52 million subscribers.
Zaid Paruk, a portfolio manager at Aeon Investment Management, said: “It is not certain as yet if MTN has intentionally broken any laws in this case, but what it does show is a weak risk and control environment within MTN at that time, which happened nearly 10 years ago,” Paruk said.
The latest Nigeria troubles have seen some analysts questioning whether this would be the last straw for MTN to pull out of Nigeria. The group could not be drawn to comment if it was reconsidering its investment in Nigeria, but alluded to feeling ill-treated.
“The re-emergence of these issues is regrettable as it damages investor confidence and, by extension, inhibits the growth and development of the Nigerian economy,” MTN said.
The company is also facing headwinds in Iran where it has said R3.4bn of its cash may remain trapped in the country for at least three years as a result of US sanctions.
In Ghana, MTN said yesterday that it had raised $238.5m in an initial public offering.