MTN Shares Rise Following Settlement With Nigeria
MTN has announced that it would be paying just $52.6 million to end the legal scuffle in Nigeria, its most lucrative and most prominent market, but in recent times, also its most troublesome.
The case had dragged on for four months, dropping MTN’s share price down 20% to its lowest level since 2009 while at the same time sparking an air of pessimism around the ease of conducting business in Nigeria.
The legal dispute centred around allegations that dividends paid by MTN between 2007 and 2015 were based on certificates that had been issued improperly.
The Central Bank of Nigeria (CBN) initially demanded that MTN and its lenders bring back the $8.1 billion it accused the company of illegally repatriating to South Africa during that time.
But after MTN presented additional documents, the central bank found that only one 2008 private placement, worth approximately $1 billion, had been irregular. MTN agreed to make a payment of $52.6 million as a “notional reversal” of this particular transaction.
The MTN Group issued a statement announcing that MTN Nigeria would pay the notional reversal fee without any admission of liability.
The central bank’s initial order had spooked investors as it had threatened to wipe out more than fifty percent of MTN’s market capitalisation when it was issued in August.
MTN shares have gone up by 4.34% since the settlement was announced.
MTN is Nigeria’s largest operator, with more than 52.3 million users in 2017, and the country is the source of one-third of the firm’s annual core profits.
The settlement with CBN is a victory for MTN, but the operator still has other legal troubles in Nigeria.
The telecoms heavyweight still has to deal with a $2 billion tax bill from Nigeria’s attorney general.
It has also just been a couple of years since the firm paid $1 billion for missing the deadline to cut off unregistered SIM cards - a fine that became the reason for its first ever annual loss.
Credit: This article originated from www.ewn.co.za