MTN cleans house
Embattled cellphone company records its first loss in 20 years as the effect of its bungled Nigerian operations finally reaches its bottom line
MTN is fairly confident it won’t have any further disastrous run-ins with the law in the 22 countries it operates in after paying a record multibillionrand fine in Nigeria and suffering its first loss in 20 years. Phuthuma Nhleko, MTN executive chairman, said this week: “We made a concerted effort to ensure, after the Nigerian situation, that we – within reason – turned every single operation upside down in terms of compliance as best as we can. It has been costly because we had to disconnect subscribers and just take a very, very conservative view.
“There is nothing – that we are aware of – that is a big regulatory issue. Could something pop up? There are 22 operations – you can never say that something won’t emerge somewhere. But, hopefully, it is nothing of materiality.”
However, MTN has come under fire over its use of transfer pricing.
“We have charged management fees like many multinational companies do. The most important point, those management fees that have been charged need to be demonstrated to having substance [so that we] don’t have [a] case where someone is saying that you are charging management fees that are not justified by the value you bring to the country. Does it get queried? Yes, it does get queried,” Nhleko said.
Last year, MTN was hit with allegations of money laundering of up to $14 billion by the Nigerian government. The group has vehemently denied these allegations.
“We are clear that there is absolutely no basis for any challenge to the repatriations that we had out of Nigeria over the years,” Nhleko said this week.
For 2016, MTN reported a loss of R3.1 billion, its first loss since
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