Nigeria unexpectedly cut its Monetary Policy Rate (MPR) by 100 basis points from 12.50% to 11.50% in an attempt to boost the economy by providing cheaper credits. Analysts, who see the rate cut as suppressing bond yields, aren’t exactly confident this will work.
South Africa’s MTN finally freed from $2bn Nigeria tax obligation
Nigeria's attorney general cancelled on 10 January a $2bn demand issued a year ago against the telecommunications operator for unpaid taxes. The dispute was one of the last cases to be settled for MTN in the country.
Nigeria’s attorney general has just removed a considerable thorn from the foot of Rob Shuter, the CEO of South Africa’s telecommunications operator, MTN.
On Friday 10 January, the magistrate decided to cancel a request for the repayment of $2bn in taxes deemed unpaid, issued in August 2018 against MTN Nigeria.
The South African group’s Nigerian subsidiary had filed a legal response at the time, which it says it has now dropped.
Positive market reaction
Although the fine has been lifted, the case has nevertheless been referred to the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service. The two institutions will be responsible for settling the dispute amicably.
The markets immediately reacted positively to the announcement, as MTN Nigeria’s share price rose by 10 percent on Monday, its highest level on the Lagos stock exchange in two weeks, Reuters reported.
“MTN remains fully committed to meeting its tax responsibilities…”, said Rob Shuter, as the 244 million customer group spent a year normalizing its relationship with Nigeria, the largest of the 21 markets in which it operates in Africa and the Middle East.
In June 2019, the operator paid the final instalment of a €1.43bn fine imposed by the National Communications Commission (NCC) in 2015. The Nigerian telecoms regulator accused it of failing to disconnect around 5.1 million SIM cards from unidentified users.
In December 2018, the group agreed to clarify its remittances and pay $53m in penalties in a case against the Central Bank of Nigeria (CBN), which accused it of “illegally” repatriating $8.1 billion with the help of Standard Chartered, Stanbic IBTC, Citibank and Diamond Bank between 2007 and 2015.
With the settlement of its various disputes in Nigeria — and despite accusations of terrorist financing in Afghanistan — MTN starts the year under good auspices.
On 3 January, the company announced that it had recovered 467 million euros following the sale of shares in two telecom tower companies in Ghana and Uganda.
The transaction, which brings MTN closer than expected to its debt reduction target of one billion euros, puts it in a good position to compete in the Ethiopian market.