Nigeria: The MTN muddle
Just when the dust was settling and MTN was starting to pick up the pieces after its $1bn fine in 2016, the Nigeria subsidiary of the Johannesburg-based telecom giant yet again finds itself in a face-off with the Nigerian government. This dispute relates to the illegal repatriation of $8.1bn to South Africa between 2007 and 2015.
The string of woes and the specific targeting of MTN, a foreign entity once viewed as a model corporate citizen, is bound to dent Nigeria’s business climate. It may scare off potential investors at a time when the February 2019 elections are fast approaching and the economy is still reeling from the 2016 recession.
The current dispute, which also includes a claim for more than $2bn owed in taxes, sent MTN’s stock tumbling to its lowest level since 2009, wiping at least 36% off its market value.
MTN remains very popular
MTN, Africa’s largest wireless carrier, has rejected both of the government’s claims and in September, sought an injunction to protect its assets. As The Africa Report went to press, the decision by the Federal High Court was still pending.
MTN Nigeria’s long-delayed initial public offering, which was part of the 2016 settlement, now hangs in the balance. Despite renewing MTN’s commitment to listing on the Nigerian Stock Exchange (NSE), MTN spokesperson Mimi Kalinda said these latest events would “potentially make it complicated” for it to happen.
This is not good news for the NSE, which could use a major boost. In September, the equities market lost a total of N624.4bn ($17bn), with a year-to-date loss of about 16%. The industrial, banking and oil and gas sectors were hit the hardest.
With nearly 60 million customers in Nigeria, MTN remains very popular. Nigeria is MTN’s biggest African market, and company leaders are confident they will weather this storm. The carrier bagged the highest number of awards, five in total, at the Nigeria Tech Innovation & Telecom Awards in Lagos last month, including Telecom Company of the Year and Telcom CEO of the Year.
This article first appeared in the November 2018 print edition of The Africa Report magazine