MTN Offers To Settle For $1.5B. Zuma Downplays Tensions

MTN Offers To Settle For $1.5B. Zuma Downplays Tensions

Africa’s largest mobile service provider is trying to negotiate with the Nigerian government on a $3.9 billion fine, and has offered to pay $1.5 billion to settle the ongoing dispute, Bloomberg reported.

Tensions between South Africa and Nigeria have been exaggerated when it comes to the fine imposed on South Africa-based mobile services giant MTN, President Jacob Zuma told CNBCAfrica.

MTN was fined $5.2 by Nigerian regulators in October for missing a deadline to deactivate unregistered SIM cards that the government claims included Boko Haram Islamic insurgents. The fine was later reduced 25 percent.

Nigeria is MTN’s biggest market with more than 60 million customers — about a third of the population.

Nigerian President Muhammadu Buhari invited Zuma to visit Nigeria this week. After a two-day official visit, Zuma told CNBC that MTN didn’t follow the rules.

“MTN is a company working here (Nigeria),” Zuma said. “There are rules and regulations in this country. If it did not follow the rules, what is the problem? Why should we think there are now tensions between the two countries?”

Zuma said Buhari also didn’t feel the MTN fine was a national issue.

“It has not caused the tension between the two countries,” Zuma said. “It has caused the tension between the authorities who administered the law here and the company.”

According to an earlier AFKInsider report, the over-the-top, record-breaking fine raised the question: is it open season on South African firms doing business in Nigeria?

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In April 2015, MTN’s regional office in Abuja shut down operations after a crowd protested xenophobic attacks in South Africa, BizNews reported. Nigeria recalled its high commissioner and his deputy over the attacks, “even though Nigerians had barely been affected,” IOL reported Nov. 9.

Operating in Nigeria has been challenging for South African retailers and manufacturers because of bureaucracy, corruption, infrastructure bottlenecks, and currency volatility, BusinessDayLive reported in November.

Cape Town-based Woolworths, which has done business throughout Africa for more than a decade, shut its three Nigerian stores in Nigeria in 2013 citing high rental costs, high taxes and complex supply chain processes, despite being in a joint venture with Nigerian conglomerate Chellerams.

South African clothing firms Foschini and Truworths cite stock delays affecting sales. The Foschini Group has a Markham store in the Ikeja Mall, Lagos. Truworths has four Nigerian stores.

Relations between South Africa and Nigeria are not great, according to IOL.

The settlement offer

MTN made a written offer to settle with Nigeria on Feb. 24, according to a letter to the government from the company’s lawyer, former U.S. Attorney General Eric Holder, Bloomberg reported.

The settlement consists of cash installments, bond purchases and network access.

It includes five annual payments between now and 2020. MTN will buy 80 billion naira of Nigerian sovereign debt issued on international markets in 2016-2017 “as a demonstration of its commitment to and confidence in the Nigerian economy.” Finally, MTN will give the government access to its fiber network until 2020, valued at 70 billion naira, Bloomberg reported.

MTN shares have declined more than 23 percent since the fine was made public, according to Bloomberg.