MTN is heading to Nigeria's Federal High Court in Lagos to fight a $3.9 billion (R59 billion) fine levelled against it in the West African nation.
"MTN Nigeria acting on legal advice has resolved that the manner of the imposition of the fine and the quantum thereof is not in accordance with the NCC's powers under the Nigerian Communications Act and therefore there are valid grounds upon which to challenge the fine," the telco says in a statement.
The saga has been ongoing since the Nigerian Communications Commission (NCC) slapped MTN with the original $5.2 billion (R79 billion) in October for failing to disconnect over five million unregistered SIM cards on its Nigerian network.
On 2 December the NCC sent MTN a letter informing it that the authority had reduced the fine to $3.4 billion, but the following day backtracked sending another letter that raised the fine back up to $3.9 billion.
MTN says the decision to fight the fine in court comes after it has carefully considered all factors "including a review of the circumstances leading to the fine and the subsequent letters received from the Nigerian Communications Commission".
MTN has until December 31st to pay the fine but says that after following due process it "has instructed its lawyers to proceed with an action in the Federal High Court in Lagos seeking the appropriate reliefs".
"MTN is advised that in the current circumstances in line with the lis pendens rule (pending legal action) the parties are enjoined to restrain from taking further action until the matter is finally determined. This is consistent with previous judicial decisions in Nigeria."
The scandal has seen MTN Group CEO Sifiso Dabengwa and MTN Nigeria CEO Michael Ikpoki both falling on their swords and resigning. Executive chairman Phuthuma Nhleko has taken over the reins during the saga and has been engaging with Nigerian authorities.
"Notwithstanding this action the company will continue to engage with the Nigerian Authorities to try and ensure an amicable resolution in the best interests of the company, its stakeholders and the Nigerian Authorities," according to MTN.
This week ratings agency Moody's cut MTN's credit rating because of uncertainty over the fine. The rating was lowered to Baa3 from Baa2 with the company's outlook rated as negative. Moody's says the negative outlook "reflects the ongoing uncertainty surrounding the NCC fine and the possible impact on MTN's liquidity profile".
Last week fellow ratings agency, Fitch, also slashed MTN's rating by one level to BBB- because of the company's "exposure to South Africa and Nigeria" while Fitch's outlook is listed as "stable".
At yesterday's close MTN's stock was worth R138.20 a share. When the fine was announced at the end of October the share price was sitting at around R190 per share. The stock priced has fallen over 37% year-to-date. The rand's recent volatility is also not helping MTN, the $3.9 billion reduced fine was the equivalent of around R56 billion in early December but is now worth over R59 billion.
MTN is the largest mobile phone operator in Nigeria, and the West African nation is also MTN's biggest market. The telco had 62.5 million subscribers in Nigeria as of the third quarter this year and the country accounts for about a third of the MTN group's revenue. MTN has 233 million subscribers across its 22 operations.
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