Mobile operator giant MTN strikes a tax deal with Nigeria
It successfully applied to have a lawsuit with a $2 billion tax claim struck off the roll
MTN’S HEAVYWEIGHT board this week delivered another coup for the mobile operator since its formation in May last year, brokering a deal between MTN Nigeria and the attorney-general of the Federal Republic of Nigeria on the mobile operator’s decision to challenge the authority’s demand for unpaid taxes.
MTN said yesterday that it successfully applied to the Federal High Court in Lagos to have the lawsuit, with a $2bn tax claim against the company, struck off the roll.
“MTN remains committed to meeting its fiscal responsibilities and contributing to the social and economic development of Nigeria in collaboration with all stakeholders,” MTN said.
The resolution of the 16-month conflict between the company and the attorney-general comes just hours after MTN pledged a $1.6 billion (R23.33bn) investment in the next three years to expand its operations in Nigeria.
The investment was announced late on Wednesday after a meeting between senior executives, including chief executive Rob Shuter and Nigerian President Muhammadu Buhari, with Buhari reaffirming that Nigeria’s government was committed to providing an enabling environment for businesses to succeed.
The investment comes after MTN established a five-member international advisory board last year, which included political heavyweights and former president Thabo Mbeki, former president of Ghana John Kufuor; Dr Aisha Abdullahi, former African Union commissioner for political affairs, and Dr Mohamed el Baradei, former director-general of the International Atomic Energy Agency.
Other members of the board include Lamido Sanusi, a former Nigerian central bank governor who is now Emir of Kano, and top business leaders such as erstwhile MTN chief executive Phutuma Nhleko, Dr Momar Nguer, president of marketing and services Total SA and former deputy minister of finance Mcebisi Jonas
Jonas was part of the meeting with Buhari, and is the chairperson for the group.
Jonas said MTN was committed to expanding its exposure to Nigeria. “We are steadfast about our investments in Nigeria, particularly over the next three years as we aim to strengthen and expand our network and systems,” he said.
“We are fully aligned with the strategic agenda of the Nigerian government and are committed to strengthening the digital economy of the country.”
In 2015, MTN was fined $3.9bn for failing to disconnect 5.1 million subscribers. After a series of negotiations led by Nhleko, the fine was reduced to $1.5bn. MTN said it paid the fine last year.
Peter Takaendesa, a head of equities at Mergence Investment Managers, said the recent governance structures that MTN had put into place in Nigeria as well as the group’s powerful board had improved the relationship with that country.
“It is still early to conclude that relations have been normalised in Nigeria as the tax issue is not yet dismissed officially by the relevant authorities and mobile banking licences still not granted to MTN and Airtel. However, the risk of a material negative outcome appears to have reduced as relations are improving and MTN Nigeria was now listed in the country,” Takaendesa said.
MTN shares rose 1.08 percent on the JSE yesterday to close at R82.59.