MTN shares surge on positive Nigeria news

MTN Group’s shares rose the most in more than six months after the Nigerian central bank softened its stance over claims that Africa’s biggest wireless carrier illegally transferred US$8.1-billion out of the country.

The Central Bank of Nigeria made the accusation late last month, plunging the South African company into a crisis that’s wiped almost a third off its share price. MTN has since provided additional information that may lead to an “equitable resolution”, a spokesman for the authority, Isaac Okorafor, said in an e-mailed statement late on Wednesday.

Four banks — Standard Chartered, Citigroup, Stanbic IBTC and Diamond Bank — have also provided further detail on the transactions that will be reviewed by the central bank, Okorafor said. The quartet were fined about $16-million between them for enabling the allegedly improper transactions.

The latest development suggests there may be a way for Johannesburg-based MTN to make a deal with Nigeria, just as the company did two years ago when it negotiated a $5.2-billion fine down to about $1-billion plus a commitment to list its local business in Lagos. However, that penalty — related to subscribers that weren’t properly registered in the country — also weighed heavily on the share price, which has yet to recover.

The central bank’s statement didn’t refer to $2-billion of back taxes MTN is also accused of owing — a claim that comes from the attorney-general’s office.

“While this is a step in the right direction, continued dialogue to reach an amicable resolution is a minimum standard expected by the investment community,” Olusola Teniola, president of the Association of Telecommunications Companies of Nigeria, said. “We look forward to the central bank disclosing the exact reasons for their actions.”

Ongoing negotiations

MTN Nigeria said it couldn’t immediately comment. An MTN Group spokeswoman told TechCentral that negotiations with the Nigerian central bank are “ongoing”.

“The case is currently being reviewed by the Nigerian courts. MTN can’t make a statement at this point as this would be purely speculative. However, we are actively engaging all parties concerned and look forward to a constructive outcome as soon as possible,” the spokeswoman said.

MTN climbed 7.5% to R78.87 by 9.32am in Johannesburg on Thursday, its biggest gain since 8 March. The stock is still down 27% since the $8.1-billion claim was made on 29 August, wiping out almost $5-billion of market value.

MTN’s response to the double accusation was to go to court, saying allegations by both the Nigerian central bank and attorney-general are unfounded, malicious and illegal.  — Reported by Yinka Ibukun and Paul Wallace, with assistance from Dulue Mbachu, (c) 2018 Bloomberg LP, with additional reporting by TechCentral