MTN’s Nigeria fight could push up risk for SA

MTN’s battles with Nigerian authorities over $10bn in repatriated funds and back taxes could increase risk in SA’s financial system, the Reserve Bank said. Africa’s largest wireless carrier by subscribers faces rising pressure to return $8.1bn to Nigeria after the country’s central bank argued that the group had repatriated funds illegally.

MTN’s battles with Nigerian authorities over $10bn in repatriated funds and back taxes could increase risk in SA’s financial system, the Reserve Bank said on Wednesday.

Africa’s largest wireless carrier by subscribers faces mounting pressure to return $8.1bn to Nigeria after that country’s central bank argued the company repatriated funds illegally.

Separately, the West African nation’s attorney-general’s office alleges the company owes $2bn in back taxes.

The “near-term repatriation of the funds to the Nigerian authorities could affect MTN’s ability to continue meeting its debt obligations, including those in the SA banking sector”, the SA Reserve Bank said in its Financial Stability Review released on Wednesday. “Given the interconnected nature of the financial system, that could increase systemic risk.”

The claims amount to almost all of MTN’s market value of about $12bn, the Reserve Bank said. That could lead to a “worstcase scenario” of MTN pulling out of Nigeria, which would increase its exposure level to reputational risk.

Nigeria’s central bank alleged in August that MTN and four banks Standard Chartered, Citigroup, Stanbic IBTC and Diamond Bank illegally repatriated the money from Nigeria. MTN sought an injunction in early September to buy itself time to fight the claim, which wiped 18% off its market value in two weeks.

MTN shares traded 0.6% higher at R89.50 at the market close on Wednesday, valuing the company at R169bn.