MTN vows to continue doing business in Nigeria despite harsh business environment

0
864
MTN Annual Results at their head office in Johannesburg on Thursday, March 8 2018. CEO,Rob Shuter spoke at the announcement of the results along with CFO, Ralph Mupita. Pic: Waldo Swiegers / Bloomberg

MTN Group Ltd. Chief Executive Officer Rob Shuter said the company is committed to Nigeria even as the continent’s largest wireless carrier considers how to respond to an order to return $8.1 billion in repatriated funds.

The relationship between Johannesburg-based MTN and its biggest market is under renewed strain after last week’s bombshell demand, which has sent the share price down almost 20 percent. The news came just three years after Nigeria hit the operator with a $5.2 billion fine — later reduced to about $1 billion — in an entirely separate dispute over SIM-card registration. That incident also weighed heavily on the share price.
MTN Committed to Nigeria Despite Facing $8.1 Billion Demand

“We have a proud history of being a major partner to the people of Nigeria and notwithstanding our current difficulties are firmly resolved to continue to do so,” Shuter said in an emailed response to questions Monday.

The CEO, a former Vodafone Group Plc executive, was appointed partly in response to the previous Nigerian crisis, which claimed the job of his predecessor. Since taking over in March 2017, he’s started a review of the South African company’s 22 markets across Africa and the Middle East, and agreed the sale of its Cyrus unit, which it concluded for 4.5 billion rand ($301 million) in cash, it said Tuesday. However, with more than a quarter of MTN’s total subscribers, Nigeria can’t be easily abandoned.

The Nigerian demand threatens MTN’s plans for an initial public offering in the country and may restrict its ability to pay dividends, depending on how long the dispute drags on.
Flagrant Violations

The Nigerian central bank elaborated Sunday that MTN and lenders “flagrantly violated foreign-exchange violations” in taking cash out of the country over eight years through 2015. While four banks were fined a combined $16 million, MTN has been left with the biggest headache, even though it would receive a naira-denominated refund in exchange for returning the $8.1 billion, according to the bank’s Deputy Governor Joseph Nnanna. Outstanding questions include how the company is to pay the cash and what happens if it doesn’t comply.

MTN shares fell 2.5 percent to 86.80 rand by the close in Johannesburg on Monday, valuing the carrier at 164 billion rand.

The crackdown on the company comes as Nigeria President Muhammadu Buhari seeks re-election for a new four-year term in a February vote. His administration has gone after companies for irregularities as well as tax-defaulters, part of a wider pledge to fight corruption in Africa’s most populous nation.

MTN and four lenders won approval from Nigeria’s central bank to repatriate funds in a ruling last year, though the agreement did not refer to transactions between the years now under scrutiny. In a letter addressed to MTN Nigeria’s CEO dated Feb. 22, 2017, the central bank confirmed the validity of the company’s certificates of capital importation, which are needed to take funds out of the country.

©2018 Bloomberg L.P.

SHARE
Previous articleNigeria Seeks to Cut $4 billion Annual Wheat Imports by Boosting Local Output
Next articleNigerian crude differentials rise after BP bids for swaps-linked grades
Samson Gbenga Salau [Editorial Board Adviser] Gbenga Samuel Salau is a professional journalist with over 17 years experience in journalism, he is a graduate of Communication and Language Arts, University of Ibadan. On completion of his youth service, he joined The Guardian as a freelance journalist and was later absorbed as a staff. While in the University, he was a campus journalist reporting for the Independence Hall and Faculty of Arts Press Clubs. As a campus journalist, he won the following awards; Independence Hall Press Best News writer; University of Ibadan Union of Campus Journalists’ Best News Reporter/Writer; First Runner-up, Reuben Abati Award for Investigative Journalism; Association of Faculty of Arts Students’ Press Best Reporter; University of Ibadan Union of Campus Journalists’ Best Political Writer; Winner, Reuben Abati Award for Investigative Journalism, and University of Ibadan Union of Campus Journalists’ Best Interviewer. He served the Association of Communication and Language Arts Students, as the Public Relation Officer, the same year he was appointed the News Editor of the Association of Faculty of Arts Students Press. The following session, he was made the General Editor, and a member of the 13-man University of Ibadan Students’ Union Transition Committee. As a reporter in The Guardian, in 2014, he won the Promasidor Quill Award Best Report on Nutrition and DAME Business Reporting category. In the 2015 edition of the Promasidor Quill Award, he won the best Report on Nutrition and Brand Advocate Categories, while in 2016, he won the NMMA Print Journalist of the Year, first runner-up Golden Pen Reporter of the Year and SERAs CSR Awards. Gbenga Salau loves traveling, reading, and listening to songs with good lyrics no matter the genre.

This site uses Akismet to reduce spam. Learn how your comment data is processed.