MTN shares knocked lower as Nigeria plays hardball

MTN Group shares fell almost 7% after Nigeria’s government said Africa’s biggest mobile operator evaded taxes and urged a Lagos court not to block a US$2-billion penalty.

The high court of Lagos should throw out the Johannesburg-based company’s attempt to stop it from paying backdated taxes, TA Gazali, a government lawyer, said in court on Tuesday.

Wole Olanipekun, a lawyer for MTN, said Nigeria’s attorney-general, who imposed the penalty on the mobile carrier, had no right to do so. MTN has previously denied it didn’t pay taxes properly in the West African nation. The case was adjourned until 7 May.

MTN fell as much a 6.8%, the most in more than five months, before paring losses to 2.1% by noon in Johannesburg.

MTN’s share price has fallen 17% since it was hit by a double Nigerian penalty in mid-2018. The Central Bank of Nigeria first ordered it to transfer $8.1-billion of repatriated dividends back to the country, before the attorney-general announced the measure on taxes. The company settled the former dispute in December, agreeing to send back $53-million and clearing itself of any wrongdoing.

MTN plans to list its Nigerian unit, which has 58 million mobile phone subscribers, in Lagos once the tax issue is resolved. It will be the biggest company on the bourse by revenue, having made sales of a trillion naira ($3-billion) last year.  — Reported by Tope Alake and Paul Wallace, (c) 2019 Bloomberg LP