MTN’s Nige­ria fight could push up risk for SA

Business Day - - FRONT PAGE - Pri­ne­sha Naidoo and Rox­anne Hen­der­son

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.

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