Buhari, Zuma slated to meet over MTN penalty
THE Forum on China-Africa Co-operation, which gets under way in Johannesburg this week, will not only provide robust discussions on trade — it will also be an opportunity for sensitive diplomatic discussions between South Africa and Nigeria over the $5.2-billion (about R74-billion) fine hanging over MTN.
Earlier this week, Nigeria announced President Muhammadu Buhari would make the final decision on whether to impose the full fine. Buhari is expected to meet President Jacob Zuma on the sidelines of the forum, according to informed sources.
MTN did not respond to queries about the dramatic turn of events in the discussions, which were being handled by executive chairman Phuthuma Nhleko after CEO Sifiso Dabengwa stepped down earlier this month.
The fine relates to about 5.1 million unregistered simcards that MTN failed to deactivate despite repeated warnings from the Nigerian Communications Commission.
Nhleko, who has been described as a skilled deal-clincher, had been negotiating for a reduction of the fine and for its payment in tranches, according to sources.
But his failure is probably in part due to the Nigerian Governors Forum, which last week supported a full fine and commended the commission for upholding regulations. The forum has historically had a powerful voice in government matters.
The South African government has been unwilling to confirm or deny its involvement A member of the Spirit of America group shares a big smile as she dances past during the 89th Macy’s Thanksgiving Day Parade in New York on Thursday. The parade, an annual tradition, took place under clear, sunny skies and featured giant balloon replicas of figures such as Hello Kitty, Snoopy and Paddington Bear in the MTN matter. Clayson Monyela, spokesman for the Department of International Relations, said the government was monitoring developments with keen interest: “The matter between MTN and Nigeria is between a private company and issues of compliance in a market they do business in.”
MTN is, however, one of the country’s important companies that have successfully expanded beyond South African borders and was an early trailblazer in the late ’90s.
It has been operating in Nigeria since 2001 and is the largest telecommunications company in that market. But it still has not listed in Nigeria and only appointed Nigerian Michael Ikpoki as CEO at the local unit in 2013.
In September, Nigerian media reported that MTN was preparing to list on the Nigerian Stock Exchange next year. The exchange did not respond to queries this week.
Buhari, who is said to be seeking better relations with South Africa, is in a tight spot as falling commodity prices hurt the oil-rich economy. Analysts said that imposing such a large fine on MTN — $1 000 for every simcard that was not registered — was an easy way to boost Nigerian coffers.
Kalu Ojah, professor and economist at Wits Business School, said the fine was sending a message and the easiest target was a foreign firm. “The [commission] must enforce the rules, but not in this manner.
“It’s politically motivated to make a statement with MTN . . . [telling] them the incorruptible government is in place,” he said. Ojah expected Buhari to pare down the fine and table a more reasonable figure.
Momentum Wealth analyst Wayne McCurrie expected MTN to postpone capital expenditure or reduce its dividend to pay the fine in its entirety. “They would have to raise more debt and they might have to do a share issue to pay that off.”
McCurrie said that even if MTN had listed in Nigeria, which provides nearly 40% of the company’s profits, the fine would have been the same because the regulator operated independently of the exchange.
Since the fine was announced on October 23, MTN’s stock has shed 22%, compared with a 2.5% fall in the JSE All Share index over the same period.
Farai Mapfinya, head of equities at JM Busha Asset Managers, said: “There are some who [say] MTN has made a lot of money out of Nigerians with nothing among the locals to show for that success.”
Dianna Games, CEO of Africa@Work and a frequent Nigeria commentator, said: “Had MTN been listed it would have symbolically positioned MTN differently in Nigeria — there’d be less of a sense from Nigerians that they’d been exploited in some way.”
South Africa had a “schizophrenic” relationship with Nigeria. The other three mobile telecoms companies in Nigeria had been fined but not nearly as much as MTN, she said. “All of those things place it in a particular position in that country.”