MTN plunges 19% on new Nigeria shock

MTN Group shares plunged 19% shortly after markets opened on Thursday after reports emerged that the Nigerian central bank has ordered four banks to refund more than US$8-billion (about R115-billion) it claimed was illegally expatriated by the telecommunications provider.

Bloomberg reported on Wednesday evening that Nigeria has ordered four banks, including Citigroup and Standard Chartered, to refund the money. MTN has slammed the central bank’s decision, saying it will harm the Nigerian economy.

The news compounds MTN’s woes in the West African country, coming just three years after a Nigerian regulator imposed a $5.2-billion fine on the company for failing to disconnect unregistered Sim cards. That fine was later reduced to $1-billion.

MTN slammed the central bank’s decision in a statement issued before markets opened in Johannesburg on Thursday. It said the Bank alleges that certificates of capital importation issued in respect of the conversion of shareholder loans in MTN Nigeria to preference shares in 2007 had been improperly issued.

“As a consequence, they claim that historic dividends repatriated by MTN Nigeria between 2007 and 2015 amounting to $8.1-billion need to be refunded to the Central Bank of Nigeria,” MTN said. “MTN Nigeria strongly refutes these allegations and claims.”

It said no dividends have been declared or paid by MTN Nigeria other than pursuant to capital importation certificates issued by its bankers and with the approval of the central bank as required by law. “The issues surrounding the (certificates) have already been the subject of a thorough inquiry by the senate of Nigeria.”

In September 2016, Nigerian lawmakers conducted a “holistic investigation” into MTN and other companies. A November 2017 report concluded that MTN Nigeria “did not collude to contravene the foreign exchange laws and there were no negative recommendations made against MTN Nigeria”, the group said.

“MTN Nigeria, as a law-abiding citizen, is committed to good governance and to abiding by the extant laws of the Federal Republic of Nigeria. The re-emergence of these issues is regrettable as it damages investor confidence and, by extension, inhibits the growth and development of the Nigerian economy.”

At 9.19am, MTN’s shares were trading at R91.50, down 14.8% on the session, after earlier touching a new multi-year low of R86.99. They are trading at levels last seen a decade ago.  — (c) 2018 NewsCentral Media