Lagos, Nigeria, September 4, 2018// – Plans to list MTN Nigeria on the local bourse could be threatened by the latest regulatory crisis which it is facing after the Central Bank of Nigeria (CBN) ordered the South African telecom giant to hand over $8.1 billion allegedly sent abroad illegally.
Nigeria’s telecom player, MTN, is at loggerheads with regulators over allegations of flouting regulatory procedures in foreign exchange transactions.
MTN has described the allegations as “false and based on completely false information.”
The funds that MTN was asked to return to Nigeria is more than half of MTN’s market capitalisation. The group’s shares plunged by over 20% following the latest announcement and sources at the company claim it could be a major setback to listing plans.
With the CBN order, the listing of the telecom giant may be put on hold as the financial sector regulator last week alleged that MTN used improperly issued certificates to transfer funds out of Nigeria after the telecom giant converted shareholder loans in its Nigerian unit to preference shares in 2007.
The apex bank went ahead to order MTN to return the $8.1 billion. The money is more than half of MTN’s market capitalization.
Officials at MTN complained that the company’s IPO timelines and key events could be affected since it indicated that the IPO prospectus that had been prepared would have to be altered.
In a statement on Monday, MTN’s Group CEO, Rob Shuter, admitted that the implementation of the company’s IPO was subject to satisfactory market conditions and that this event would potentially make it complicated for MTN to conclude the process.
“Despite this, we have instructed our advisors and our teams on the ground to continue at full pace,” he said.
This latest development is coming few years after another regulator slammed an industry record fine on the operator for failing to disconnect GSM lines with incomplete registration details.
The latest controversy is regarding a sum of over $8 billion which MTN reportedly repatriated from Nigeria with the help of four local banks that had been fined by Nigeria’s finance sector regulator, the Central Bank of Nigeria (CBN).
According to a report, CBN had alleged impropriety in the fund transfer, claiming the operator and its banks failed to receive regulator’s approval before transferring the sum of $8,134,312,397.63 out of Nigeria.
The regulator subsequently directed MTN to return the sum to its coffers.
“The CBN has asked the management of the banks and MTN Nigeria Communications Limited to immediately refund the sum of $8,134,312,397.63, illegally repatriated by the company to the coffers of the Central Bank of Nigeria,” the apex bank said.
For their alleged roles in the repatriation that happened between 2007 to 2015, the CBN slammed fines on the fingered commercial banks – Standard Chartered Bank, Citibank Nigeria Limited, Stanbic IBTC Bank Limited, and Diamond Bank Plc.
Standard Chartered was fined NGN2.4 billion; Stanbic IBTC NGN1.8 billion, Citibank NGN1.2 billion; and Diamond Bank was slammed with a NGN250 million fine.
It would be recalled that Nigeria’s telecom sector regulator, the Nigerian Communications Commission (NCC), in 2015, slammed MTN with a fine of $5.2 billion.
The fine was later reduced to $1.7 billion after a series of negotiations, including an agreement on the local listing of MTN Nigeria on the Nigerian Stock Exchange (NSE).
The latest fine has divided industry experts in the telecom and finance sectors.
In South Africa, experts said the move by the CBN could discourage foreign investors from investing in Nigeria’s telecom sector.
Peter Takaendesa, Cape Town-based portfolio manager at Mergence Investment Managers, told Sowetan Live the situation was untenable.
“Investors want certainty in terms of laws. There’s no way MTN will find $8 billion to put in Nigeria. There has to be a resolution,” Takaendesa said.
But in Nigeria, several supporters of the CBN move accused MTN of constantly flouting regulations.
One of the supporters of the fine is Senator Dino Melaye who spoke about MTN’s violations of fund repatriation rules.
“I have been vindicated with the CBN’s pronouncement on MTN. When I raised the issue in 2016, I was called all sorts of names. All figures and banks mentioned by me are exactly quoted by CBN. My prayer in that motion is exactly the resolution of CBN,” he said.
By Justus Adejumoh
This article was originally published on independent.ng.
