MTN Group Ltd. and its bankers have provided more documents that may reduce Nigeria’s $8.1 billion claim on the South African wireless carrier, which could be resolved soon, Central Bank of Nigeria Governor Godwin Emefiele said.
The central bank alleged in late August that MTN and four banks -- Standard Chartered Plc, Citigroup Inc., Stanbic IBTC Plc and Diamond Bank Plc -- illegally repatriated money from Nigeria and that the company should return $8.1 billion. The local regulator also fined the four banks a combined $16 million.
Speaking to reporters in London on Sunday, Emefiele said he expected that the new information would help cut the size of the claim and that the matter would be resolved “amicably.”
“I don’t think it will be at $8.1 billion having provided documents,” Emefiele said, adding his staff is studying the documents and he hoped to make a decision on the matter in a “couple of weeks.”
MTN sought an injunction in early September to buy itself time and fight the claim in its biggest market, which wiped as much as 36 percent off its market value within two weeks.
The central bank has asked the Federal High Court in Lagos to deny MTN’s request and said the company should pay an annualized 15 percent interest on the dividends until the matter is ruled upon, and then 10 percent until the whole sum is paid, according to legal documents filed by the regulator.
“They will see they have been given a fair hearing,’’ Emefiele said. “More information has been provided and I’m very optimistic that matters are going to be resolved amicably.’’
Emefiele said the clash with MTN had taken a “global dimension” that it didn’t need to and that he was keen to demonstrate to international investors how open the Nigerian market is, calling the MTN matter “isolated’’ and no reason “for anyone to lose any sleep.’’
“This is not a matter that should have blown so openly,’’ he said. “Nigeria is a country that happens to be very, very open.’’
MTN Chief Financial Officer Ralph Mupita said earlier this month 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.
MTN Group Ltd., the wireless carrier facing a combined $10 billion in claims from authorities in Nigeria, said it may no longer seek to raise capital through an initial public offering on the country’s stock exchange.
Africa’s largest mobile carrier is reconsidering the IPO amid a dispute with authorities in its biggest market that wiped more than a third off the company’s market value over three weeks. MTN pledged to list the shares after being fined $1 billion for not disconnecting SIM cards two years ago.
MTN is looking at other ways to trade the stock in Lagos, including a so-called introduction, in which existing shares are listed, Chief Financial Officer Ralph Mupita said in an interview in Johannesburg. MTN’s board still needs to make a final decision, he said. MTN’s Nigerian shares already trade over the counter.
“The IPO type of listing has become challenging under current market conditions,” Mupita said. “We are exploring other options. The Nigerian business would not get fair value under current market conditions.” A listing by introduction is the simplest way forward, he said.
MTN could complete the listing by the end of this year or first quarter of 2019, the CFO said. Despite the dispute with the central bank over the repatriation of $8.1 billion out of Nigeria and a separate tussle over $2 billion in back taxes, MTN is committed to a listing, said Mupita.
“We have sought legal protection for our Nigerian business and a judge has been appointed for upcoming hearings,” Mupita said. The central bank last week said it is considering new information provided by MTN and four banks into the outflows and that it expects to resolve the matter soon.
MTN’s shares pared an earlier gain of as much as 3.7 percent to close 2.1 percent higher at 89.40 rand in Johannesburg on Monday. In the weeks after Nigerian authorities challenged the transfer of funds, MTN plunged 35 percent, but the stock has since recovered about half of that drop. “That cost our shareholders $5.5 billion,” said Mupita. MTN’s investor base is about 44 percent South African. Other major shareholders are based in the U.S., the U.K., Europe and the Middle East.
MTN still sees a great business case for Nigeria, Africa’s most populous nation, with less than a third of users currently on the internet, Mupita said.
“We are engaging with authorities and investors and hope to reach a speedy resolution on the matter, to deal with the overhang on our share and the concerns of shareholders about Nigeria’s investment climate for foreign companies,” Mupita said.
Nigerian authorities have come under criticism following an impasse with MTN and lenders including Citigroup Inc., Standard Chartered Plc, Standard Bank Group Ltd. and Lagos-based Diamond Bank Plc that threatened to spook investors.
“Investors are getting very nervous and the last thing Nigeria needs is for investors to be nervous," said Bismarck Rewane, chief executive officer of Financial Derivatives Co., speaking from Lagos. The government should resolve the issue with MTN “as quickly as possible.”
The Nigerian Communications Commission (NCC), says its awareness campaigns against the menace of pre-registered SIM cards, which has been a recurring trend in the country’s telecom sector is yielding results.
Mr Salisu Abdu, the Head, Enforcement Unit of the commission, made this known in a statement in Lagos on Sunday.
Abdu said that the commission had carried out a three-day comprehensive enforcement in some major markets in Lagos to fish out perpetrators of pre-registered SIM card.
He said that the latest enforcement exercise was largely informed by a report from the office of the National Security Adviser about the prevalence of pre-registered SIM cards at some locations in Lagos.
He said that the adviser however expressed some measure of satisfaction that the trend seemed to be on a downward trend when compared with what obtained few years ago.
“We visited computer village, some markets in Ikorodu and we also visited one in Bariga with the objective of identifying where the sale of pre-registered SIM cards is ongoing.
“Fortunately enough, it was only in computer village we were able to buy only one Airtel SIM card from a mobile agent.
“We appreciate the level of compliance in Lagos; it apparently means that there is adequate awareness campaign that people are now aware that the sale and buying of pre-registered SIM card is criminal,” he said.
Abdu said that the commission had addressed the media on the outcome of the outing at the Lagos Command of the Nigeria Security and Civil Defence Corps (NSCDC), where some of the apprehended suspects were taken for interrogation.
“We went to two locations, Alaba International market and Orile market along Badagry expressway.
“At Alaba market, we purchased a pre-registered SIM card from an agent, a Globacom agent and in Orile we found pre-registered SIM cards on a market woman who, in fact, was seated with a lot of SIM cards being sold to members of the public.
“It is those same cards that criminals are using to commit a lot of crime and you can now understand why it had sometimes been difficult for security operatives in the course of their investigations of criminal offences to identify people who have actually committed such crimes,” Abdu said.
The enforcement official said that the last day of the raid of phone markets in Lagos was concentrated largely on the Saka Tinubu market in Victoria Island where two more persons who were found selling pre-registered SIM cards and were picked up by the combined team of NSCDC and NCC officials.
While speaking on the commission’s next line of action, Abdu said that investigations would first be carried out by the NSCDC, which accompanied the enforcement team during the exercise.
“We have to get to the root as to where they are getting the pre-registered SIM cards and I am sure the old woman and some of the persons arrested are not the ones doing the registration, there must be somebody who is supplying the SIM cards to them.
“We will need to find out the people who are behind it and we believe some of these challenges are coming from registration agents.
“So, we have been trying as much as possible to warn network operators to ensure that they checkmate their registration agents.
” We will also look into all the SIM cards we recovered in this exercise and ensure that we communicate necessary sanction to the mobile operators,” he said.
Abdu recalled that in 2017, the Executive Vice Chairman, NCC, Prof. Umar Garba Danbatta hosted a stakeholders’ meeting with telecom network providers at the commission’s headquarters in Abuja where he expressed displeasure at the persistence of improperly registered and pre-registered SIM cards.
Abdu said that the commission had subsequently launched a nationwide television commercial in major national television and local television networks in all the states of the federation in March to sensitise telecom subscribers on the dangers of pre-registered SIM cards.
MTN Group announced that MTN Nigeria has applied to the Federal High Court of Nigeria for injunctive relief from the Central Bank of Nigeria (CBN) and the Attorney General of the Nigerian Federation (AGF)’s orders. As previously disclosed, the CBN has alleged improper dividend repatriations by MTN Nigeria and requested that $8,1 billion be returned “to the coffers of the CBN”.
At the same time, the AGF has alleged unpaid taxes on foreign payments and imports, and has demanded that approximately $2,0 billion in relation to these taxes be paid to the Federal Government of Nigeria (and now directed that the payment of the $8.1 billion is dealt with through his office rather than as directed by the CBN). MTN Nigeria strongly denies these allegations and claims.
The aim of MTN’s application to the High Court is to protect MTN Nigeria's assets and shareholder rights within the confines of Nigerian law while the company continues to engage with the relevant authorities.
MTN Group President and CEO Rob Shuter said “We believe that we have complied with all relevant laws, and in light of that, and the conflicting instructions from different organs of State, we have had no choice but to seek relief from the Courts in Nigeria. We remain firmly committed to the Nigerian market and will continue to engage with the authorities on these matters.”
A fortnight ago, the CBN announced it wrote the firm to refund about $8.134 billion (about N2.5trillion at N306.15 to $) repatriated illegally out of Nigeria.
On the other hand, the AGF had a few days after the CBN sanctions also accused MTN of not paying taxes on foreign payments and imports totaling about $2 billion to the Federal Government.
CBN's spokesperson, Isaac Okorafor, said the repatriation was facilitated by four commercial banks using irregular Certificates of Capital Importation (CCIs) issued on behalf of some offshore investors of MTN Nigeria.
The four banks, Standard Chartered Bank, Stanbic-IBTC, Citibank and Diamond Bank, were also asked to refund various amounts totaling N5.87 billion.
The amounts, which have since been deducted from the banks' accounts with the CBN, include N2.5 billion for Standard Chartered; Stanbic IBTC (N1.9 billion); Citibank (N1.3 billion and Diamond Bank (N250 million).
The CBN accused the banks of violating the country's laws, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and the Foreign Exchange Manual, 2006.
MTN, which described the allegation as regrettable, rejected both sanctions, promised to vigorously defend its position that it did not do anything illegal an unlawful.
The Nigerian government has slammed South African telecoms giant, MTN Group, with a $2 billion tax demand.
The new tax bill incurred by the telecom firm over the last decade comes amid controversies generated by the government’s directive to MTN to hand over $8.1 billion it accused the firm of illegally sending abroad with the collusion of four banks.
MTN said it had been in talks with Nigeria’s Attorney-General, Abubakar Malami, over concerns around tax compliance; but it was billed all the same.
The company in a statement said it was billed for importation of foreign equipment and payments to foreign suppliers, all spread across a period of about ten years.
“In this process, his (the Attorney-General’s) office made a high-level calculation that MTN Nigeria should have paid approximately $2.0 billion in taxes relating to the importation of foreign equipment and payments to foreign suppliers over the last 10 years,” MTN said.
The firm added, however, that its total payment of around $700 million over the 10-year period fully settled the amount owed under the taxes in question.
Reuters reports Tuesday that shares in the telecom firm dropped 5.6 per cent to 81.95 rand as at noon, bringing losses since last week to nearly 25 per cent. Last Thursday, the telecom firm was issued $8.1 billion demand over concerns around repatriation of funds.
The latest demands come two years after Africa’s biggest telecoms company agreed to pay more than $1 billion to end a dispute with Nigeria over unregistered SIM cards.
MTN, in its reaction, described the latest demands by Nigerian authorities as “regrettable and disconcerting”.
The company said it will “continue to engage with the relevant authorities on all these matters, and we remain resolute that MTN Nigeria has not committed any offences and will vigorously defend its position.”