MTN shares crash 23% on USD$8bn demand from Nigeria

• The telco was alleged to have illegally repatriated USD$8.1bn between 2007 and 2015 out of Nigeria

MTN’s share price crashed 23% and Standard Bank’s share price fell 3.4% today morning after they confirmed the Nigerian central bank had ordered them to return billions it claimed had been taken out of the country illegally.

MTN’s share price fell to USD5.9 (R83.06) after it confirmed it had received a letter from Central Bank Nigeria (CBN) alleging it had illegally repatriated $8.1bn between 2007 and 2015.

Standard Bank issued a statement on Thursday morning saying it had received a demand from the central bank for $2.632bn, which its Nigerian subsidiary had issued in foreign exchange to MTN.

Standard Bank said it also faces a fine of $5.2m (about R75m) for violating foreign exchange laws.

Vestact portfolio manager Michael Treherne said that from the outside, “it looks like a bit of a witch-hunt”.

“MTN was using numerous banks, so basically what [the central bank] is insinuating is that MTN was colluding with multiple international organisations to do this, which seems highly unlikely…. And as MTN points out in their announcement, the senate said there were no foul dealings in their own investigations.”

If MTN were to lose this battle, Treherne said the group would have to borrow cash to send to its Nigerian business, and the cash would then be locked up in that country.

The group would have to pay interest “on a loan it doesn’t need” and would also be exposed to currency risks.

Reuters reported late on Wednesday that Nigeria’s central bank had ordered four banks to return the funds that MTN illegally sent out of the country in breach of foreign exchange regulations.

Standard Bank Group said it would engage with Nigeria central bank on the matter.

MTN rejected the claims on Thursday morning, saying the matter was earlier investigated by the Nigerian authorities, which found no evidence of wrongdoing on the part of the company.