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Uncertainty over MTN fine discussions

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 23 May 2016
MTN says shareholders will be informed via SENS if there is any update on the Nigerian fine negotiations.
MTN says shareholders will be informed via SENS if there is any update on the Nigerian fine negotiations.

MTN has advised shareholders not to react to media reports that it has paused negotiations with authorities in Nigeria over a pending R60 billion fine.

This after Bloomberg reported on Sunday that talks between Nigerian authorities and MTN had been suspended while the country's House of Representatives completes an investigation into the size of the penalty and how it was delivered.

MTN group executive for corporate affairs, Chris Maroleng, says the company has noted recent media reports about the fine imposed on MTN Nigeria by the Nigerian Communications Commission (NCC).

He would not say whether discussions were definitely continuing and would only comment to ITWeb that: "MTN cautions shareholders not to make any decisions based on media reports. Shareholders will continue to be informed of any material updates via SENS."

No Stock Exchange News Service (SENS) announcement has been released by MTN since 28 April, implying discussions with authorities are still ongoing. In the last cautionary announcement on SENS, MTN once again reiterated it continued to engage with the Nigerian authorities "to try and ensure a mutually acceptable resolution to the fine".

However, Nigeria's ministry of communications spokesman, Victor Oluwadamilare, told Bloomberg lawmakers "have set up a committee to investigate the MTN saga and they are still on it".

"The federal government, the Nigerian Communications Commission and the ministry of communications can do nothing about the MTN case until the committee concludes its thorough investigation," Oluwadamilare said.

"There's no point dealing with a particular organisation from different fronts. It would be counter-productive."

Months of negotiations

MTN has been in talks with authorities over the record fine since it was announced last October. At first, the fine was set down at $5.2 billion (R81 billion) as a penalty for MTN failing to meet a deadline to disconnect over five million unregistered SIM cards on its Nigerian network.

In early December, the NCC reduced the fine to $3.4 billion (R53 billion) but the following day backtracked and raised it to $3.9 billion (R60 billion).

In March, Reuters reported Nigeria's parliament had launched a probe into whether the NCC had the authority to reduce the fine in terms of Nigerian law.

At the time, MTN also did not make any official comment on the alleged probe, saying in a statement it had noted reports out of Nigeria and would "await clarity and further guidance" from the federal government of Nigeria.

A month earlier, MTN had paid Nigerian authorities $250 million (R3.9 billion) in a "good faith payment" in a move towards settling the penalty. The telecoms giant also withdrew a court case it had lodged in the Federal High Court in Lagos over the matter.

More losses

In the first quarter of 2016, MTN had to disconnect an additional 4.5 million subscribers in Nigeria due to an ongoing registration compliance process in the country.

In its first quarter update, MTN said it now believed it had dealt with all Nigerian subscribers who were considered to be non-compliant.

"The operation continues to focus on reconnecting subscribers through proactive engagement and win-back offers," it said.

At the end of March, MTN had 57 million subscribers in Nigeria, which remains its biggest market. MTN has 229 million subscribers across 22 operations in Africa and the Middle East, 30 million of which are in SA.

MTN's share price has fallen 34% since the fine was announced in October and over 40% in the past year. At 11am CAT, the shares were trading at R126.30 per share.

MTN is no longer the highest valued telecommunications operator in Africa after its market capitalisation recently slipped to below that of rival telco Vodacom. MTN's market cap is now R232 billion, compared to Vodacom's R245.5 billion.

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