MTN yet to recover after settlement with CBN
Although these are early days, MTN Group is yet to fully recover from the devastating impact of its regulatory collusion with Nigerian authorities after settling the matter by paying a $53 million fine.
The stock price of the Johannesburg-based wireless carrier has increased marginally by only 2.05 percent since the news of settlement December 24 2018. However, the share price is 20.44 percent less than its price of ZAR 10966 in August 28, 2018.
“Market participants largely expected MTN would resolve its issues with the Nigerian authorities. The limited reaction in the aftermath suggests this was likely already priced in,” Rafiq Raji, chief economist at Macroafricaintel said.
Businessday analysis revealed that as at the close of the Johannesburg market yesterday, MTN share price was up 0.87 percent to trade at ZAR8725, this is 24.82percent higher than the worst performance of ZAR 6990 in September, the month when there was more pressure in the dispute with Nigeria authorities.
The Apex bank had in August 29, 2018 ordered MTN and its four banks to refund $8.134 billion back into the country, for what it described as ‘flagrant violation of extant laws and regulations of the Federal Republic of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 of the Federal Republic of Nigeria and the Foreign Exchange Manual, 2006’.
Johnson Chuckwu, MD of Cowry Asset, while responding to MTN stock performance for the review period said market responded to the news but is not an automatic process, as he said the company’s performance will now be a strong driver of the share price.
“When the market got the news, it responded and we saw a recovery but over time, performance justifies higher market price and so it all now depends on the company’s performance in terms of profitability,” Chuckwu told Businessday.
MTN Group through its twitter handle revealed that the apex bank reached an agreement of the telecommunication giant to pay a fine of $53 million as against the initial $8.1 billion.
According to CBN, the decision to reduce the amount was reached as a result of the new information obtained from the telecom company. It said “there is nothing wrong with repatriation by MTN except with the pricing of the private placement.”
Meanwhile, at the last MPC meeting, Godwin Emefiele, the CBN governor said “I will continue to say that CCI that are been issued to our foreign investors remains sacrosanct and no other company is being investigated on the issue of CCI,” he stressed that the MTN issue was an isolated one.
There are indications that the MTN Group will now focus on listing its Nigerian subsidiary on the Nigerian Stock Exchange (NSE), now that it has settled its $8.1 billion dispute with Nigeria’s Central Bank.