MTN listing threatened by Nigerian ‘witch-hunt’

Mobile operator seen as political fodder ahead of elections

● The future of MTN’s proposed listing on the Nigerian Stock Exchange remains uncertain, as tension between the company and regulatory authorities escalated this week.

The listing formed part of the settlement of a fine by the Nigerian authorities two years ago that had threatened the future of Africa’s biggest mobile operator.

MTN faced one of the world’s largest corporate fines after failing to disconnect unregistered subscribers, but managed to reduce it from more than $5bn to $1.7bn, promising to list its Nigerian business on the bourse.

However, growing tension between the authorities and the company — one of the biggest in Nigeria — has put the listing in jeopardy.

Alan Pullinger, Group CEO of FirstRand, told Business Times the listing was “probably going to be delayed, maybe for a long time”.

“We were very hopeful that we were going to be listing a great business, but you can see now obviously it’s a lot more difficult and complicated, so I’m not sure how it’s going to unfold,” he said.

RMB Nigeria is one of the banks working on the listing of MTN Nigeria and would be issuing the shares on its behalf.

Pullinger said he did not know by how long the listing would be delayed or if MTN would miss the deadline of May next year.

Earlier this week, Nigerian tax authorities slapped MTN Group with a $2bn bill for unpaid taxes.

This came after the mobile operator was ordered by the Central Bank of Nigeria last week to pay back $8.1bn (R123bn) in dividends it said were illegally sent abroad between 2007 and 2015.

The central bank fined Standard Bank, Stanbic, Citigroup, Standard Chartered and Diamond Bank $16m for facilitating them.

Since MTN received the letter from the central bank on August 29, its share price has declined as much as 30%.

Pullinger said what was happening in Nigeria with MTN was not encouraging from a foreign investor perspective and had made the group more cautious about doing an acquisition in Nigeria.

“Even if they [MTN] decide to come into the market, there is likely to bean under subscription because everyone is concerned that there is an election coming up, so they wouldn’t want to come and take up shares” because of political uncertainty, Fola Abimbola, an equity analyst at Lagos-based CSL Stockbrokers, said.

If Nigerian authorities were to investigate other telecom companies such as Airtel and 9Mobile “you would find some infractions and some improprieties, so it seems like it’s a witch-hunt and MTN is being targeted”.

In an e-mailed response to questions from Business Times, Professor Umar Danbatta, executive vice-chairman and CEO of the Nigerian Communications Commission, said MTN would “absolutely” continue with the listing.

“It’s a part of the agreement we reached and we, therefore, expect MTN to honour it. We have already received assurances from the company that the process is at an advanced stage, as MTN Nigeria has gone far with other regulatory bodies which handle the IPO. So yes, we are confident the listing will see the light of day before the deadline expires,” Danbatta said.

Some analysts believe that MTN Nigeria has become political fodder in the run-up to the elections.

Others are going as far as to say Nigeria’s disdain for the SA government — which it apparently views as “weak” — has turned SA businesses in Nigeria into punchbags.

This is a far cry from the Mbeki-Obasanjo years, when diplomatic relations between the regional powers were at their height.

Asked whether MTN was a victim of a witch-hunt, Danbatta said: “During times like this conspiracy theories like the one you allude to, easily come up. But the undeniable truth is . . . the theory is just a figment of the imagination of the people weaving them”.

The claim that the money from MTN was needed for the 2019 elections was “preposterous”, Danbatta said.

But the struggles of the mobile operator that makes about 27.5% of its revenue from Nigeria, the second-largest contributor after SA’s 33.7%, has caught the attention of the SA government.

MTN told Business Times it had received a number of calls from stakeholders in SA, Nigeria and in other territories that MTN

Huge claims could make it impossible for investors to value the company

serves.

“The sentiments being expressed to MTN are largely those of concern and support. At a government level, the concern is primarily driven by the interest that the Public Investment Corporation [PIC] has in MTN.

“The SA government naturally seeks to safeguard the investments of its workers and we continue to engage these key stakeholders and to provide briefings and updates, as required,” MTN said.

The PIC’s interest in MTN is about 12.4%. MTN said the listing had always been subject to satisfactory market conditions and these events would potentially make it more complicated to conclude the process.

“Despite this, we have instructed our advisers and our teams on the ground to continue at full pace,” MTN said, adding that it remained committed to Nigeria.

It also said the 2015 agreement “did not stipulate a time frame for the IPO, it simply states that satisfactory market conditions would be required. It is MTN that proactively sought to conclude the IPO by the end of this calendar year.”

Alastair Jones, an analyst at Londonbased New Street Research, said that given the nature and scale of the claims, it was difficult to see an IPO of the Nigerian business.

“Assuming the claims are found to be unavoidable, it would rightly question the going concern of the entity. Unless the operator or the government can come to some nearterm conclusion, it will be virtually impossible for investors to accurately value the entity,” said Jones.

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