Nigeria in climbdown over hefty MTN fine
Penalty up for review; group and banks engaging with nation’s central bank after request to submit documents
THE CENTRAL Bank of Nigeria (CBN) has moved to review the hefty $8.1 billion (R119 billion) penalty imposed on Africa’s largest wireless provider, MTN, as the lawmakers flex their political muscle.
The CBN said it had requested the group to submit documents on concerns that allegations against it were adverse to foreign direct investment.
“In response to the recent regulatory actions, the banks and MTN are engaging the CBN and have provided additional information which is being reviewed with a view to arriving at an equitable resolution,” spokesperson Isaac Okorafor, said in an emailed statement late on Wednesday.
MTN surged 6.53 percent on the JSE yesterday to close at R78.17 on the news that the CBN said it was talking with the telecoms giant and four banks it accused of flouting the country’s regulations last month.
The sanctions saw MTN apply to the Federal High Court of Nigeria for injunctive relief restraining the CBN and the the Attorney-General for the Federal Republic of Nigeria from taking further action in respect of their orders.
But analysts yesterday warned that MTN was not yet out of the woods.
Peter Takaendesa of Mergence Investment Managers said the amounts being demanded by Nigerian authorities were not practical.
“MTN simply cannot afford to pay $10bn to Nigeria. The sooner they resolve the issue the better for Nigeria and MTN, provided there is fairness and a reasonable outcome,” he said.
The sanction by the CBN comes a year after the group was cleared over accusations of illegally taking money out of Nigeria.
The CBN claimed MTN had illegally repatriated money from the country over eight years to 2015.
Jon Tullett, research manager at IT Services, Africa, said the news came against the backdrop of talks behind closed doors.
“You are seeing a fair amount of political manoeuvring and movement behind closed doors to find a solution to the issue. I do not think it is the end,” Tullett said.
MTN previously ran into trouble with Nigerian authorities and was fined $5bn in 2015 for missing the deadline to disconnect 5 million unregistered SIM cards.
The outcome of the CBN decision was expected to set a precedent on other telecoms companies that are operating on the continent.
“This is something that is being watched closely by other telecoms companies as well as other governments,” Tullett said.
MTN is facing a double whammy with the order from the CBN as well as the $2bn fine for unpaid taxes on foreign payments and imports which was imposed earlier this month.
The company has, however, denied the allegations.
Last month it said it remained hopeful that the situation could be resolved with the Nigerian authorities.
“We remain resolute that MTN Nigeria has not committed any offences and will continue to vigorously defend its position,” the company said.