MTN Pays $52.6M Settlement To Nigerian Central Bank, Refocuses On IPO

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Written by Peter Pedroncelli

South African Mobile operator MTN agreed to pay a $52.6 million settlement to the Nigerian Central Bank after negotiating a fine that was originally set at $8.1 billion.

Nigerian authorities reduced the amount they claim MTN improperly repatriated to South Africa from $8.1 billion to the far more favourable amount of $52.6 million, according to Businesslive.

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At the end of August, Nigeria ordered MTN to refund $8.1 billion it believes was illegally expatriated by the country’s biggest mobile operator in the eight years leading up to 2015.

Shares in MTN rose 8.2 percent when the favorable settlement was announced, according to Techcentral.

MTN provided documents to Nigerian officials to prove that all but a $1 billion preference share placement in 2008 had been completed with the required regulatory approvals, and even that had received approval-in-principle, but not final regulatory approval from the Nigerian Central Bank. The final settlement of $52.6 million was calculated on that basis.

As one of MTN’s three biggest markets, Nigeria is very important for the mobile operator.

The Nigerian market accounts for 29 percent of MTN Group’s service revenue, 34 percent of the voice revenue and 30 percent of digital revenue, according to ITWebAfrica.

nigerian central bank
MTN can now refocus on their Nigerian IPO. Photo – AP – Sunday Alamba

With this issue now settled, MTN looks set to refocus its energy on a listing on the Nigerian Stock Exchange.

The mobile operator was in the process of finalizing its Nigerian IPO before they were ordered to refund the $8.1 billion, but this settlement may set things back on track for MTN and the Nigerian Stock Exchange, according to Businessdayonline.

Originally MTN aimed to launch the listing by the end of 2018, but it will take more time for final regulatory approval.

Nigerian Central Bank settlement means IPO is back on track

Africa’s biggest mobile phone company by subscribers will make 30 percent of its Nigerian shares available for listing on the Nigerian Stock Exchange, with those shares worth around $512 million, according to ENCA.

The stock exchange listing was one of the settlement conditions placed on the telecoms giant after Nigeria fined MTN $5.2 billion for missing a deadline to disconnect unsubscribed Nigerian customers.

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MTN was able to reduce the fine to about $1.7 billion with a promise to list on the local bourse.

Most of the shares will be sold to Nigerian institutions and individuals. MTN is the biggest tax contributor, biggest employer and biggest company in Nigeria, and now Nigerians will be able to own a piece of the mobile operator through the shares.

The successful share sale would be the biggest on the Nigerian Stock Exchange after Starcomms, which raised $796 million with its 2008 listing, according to Techcentral.

This is not the end of MTN’s troubles in Nigeria related to money authorities believe to be outstanding.

The Nigerian attorney general has calculated that MTN Nigeria should have paid approximately $2 billion in taxes relating to the importation of foreign equipment and payments to foreign suppliers over the last 10 years, according to CityPress.

MTN Nigeria’s own assessment suggest that total payments made to the tax authorities should be $700 million.