MTN shares bounce back as Nigerian standoff subsides

MTN shares recovered to their best level in two weeks on Thursday after Nigeria said it was working towards an amicable solution to a standoff that has played havoc with the mobile operator’s stock.

The group’s shares, which dipped below R70 for the first time in 12 years this week, closed 6.5% up at R78.17 after Nigeria’s central bank said it was angling towards “an equitable resolution”.

Mergence Investment Managers portfolio manager Peter Takaendesa said since the market currently valued MTN’s Nigerian business at almost zero, “any news of a potential resolution should be supportive of the share price”.

The central bank told MTN in late August, when MTN’s shares were at R107.34, that it had to return $8.1bn worth of dividends it repatriated “illegally” between 2007 and 2015. It also fined four banks, including Standard Bank’s Nigerian unit, for transferring the funds.

Days later Nigeria’s attorney general told MTN it also owed $2bn in unpaid taxes.

The central bank said late on Wednesday it was engaging MTN and its four banking partners there, and the parties had provided “additional information which is being reviewed with a view to arriving at an equitable resolution”.

MTN has said before that the central bank’s claims that its repatriations consisted of illegally converted preference shares were untrue, and the dividends it moved were ordinary dividends. “We are convinced we can make that case,” CEO Rob Shuter said.

The group managed to make a better deal after Nigerian authorities fined it $5.2bn in 2015 for failing to disconnect unregistered SIM cards. The fine was reduced to just over $1bn.

The central bank sought to assure investors that “the integrity of the [foreign exchange] regime remains sacrosanct and there shall be no retroactive application of foreign exchange rules and regulations”.

The bank said it welcomed “all legitimate investors” that wanted to take advantage of the “enormous investment opportunities” in Nigeria.

Analysts had said the apparently hostile move against MTN could deter other investors.

Additional information is being reviewed to arrive at an equitable resolution