MTN faces mounting pressure from Nigeria on $8bn claim
MTN fell as much as 11 per cent in Johannesburg on Friday, the steepest decline since first week of September
MTN Group is facing mounting pressure to transfer $8.1 billion to Nigeria after the country’s central bank argued the South African wireless carrier should pay interest on dividends it said were repatriated illegally.
MTN should pay an annualised 15 per cent interest until courts rule on the conflict, and then 10 per cent until the whole sum is paid, the Central Bank of Nigeria said in documents filed with the Federal High Court in Lagos in the past week. The central bank asked the court to deny MTN’s request for an injunction that would stop it from transferring the money.
The central bank is still “aggressively engaging” with MTN and hopes that “an amicable resolution will soon be achieved,” Isaac Okorafor, a spokesman for the Abuja-based lender, said in a text message.
MTN fell as much as 11 per cent in Johannesburg on Friday, the steepest decline since first week of September.
The central bank alleged in late August that MTN and four banks - Standard Chartered, Citigroup, Stanbic IBTC and Diamond Bank - illegally repatriated the money from Nigeria. MTN sought the injunction in early September to buy itself time and fight the claim in its biggest market, which wiped as much as 36 per cent off its market value within two weeks.
Godwin Emefiele, governor of the CBN, last week said that the dispute would be resolved soon and that “everyone will be happy.”
The court filing “is contradicting what the CBN governor said recently,” said Peter Takaendesa, a portfolio manager at Mergence Investment Managers in Cape Town. “Any aggressive language from Nigeria will obviously put pressure on the share price again.”
MTN declined to comment.
The transfers “may have been premeditated and contrived as a scam to make and maximise profits, defraud the Federal Republic of Nigeria and to enjoy unlimited foreign-exchange income perpetually from a single investment without complying with the foreign-exchange laws and regulations of Nigeria,” the central bank said in the documents.
To back its case, the central bank will rely on a 2009 admission by Standard Chartered that it transferred money from Nigeria for MTN without obtaining final approval from regulators, according to the documents.
A spokeswoman for Standard Chartered in Lagos, Dayo Aderugbo, didn’t answer calls to her mobile.
MTN's chief financial officer Ralph Mupita said the spat in Nigeria may cause the carrier to reconsider raising cash through an initial public offering of its local unit in Lagos. Instead, MTN may list the business by way of introduction, which places existing securities on the exchange.
Updated: October 5, 2018 10:15 PM