MTN Group calls planned local listing ‘pretty challenging, awkward’

MTN Group is now describing its long-awaited listing of shares on the Nigerian Stock Exchange (NSE) as “pretty challenging and awkward”, saying the penalties on the company for several infractions were incapacitating.
 
The development is a clear indication that the telecommunications giant is shifting position and not ready to part with a fraction of the group’s equity stake for the country where it makes majority of its profit.Specifically, the company’s Chief Financial Officer (CFO), Ralph Tendai Mupita, said the $10.1 billion demand by Nigerian authorities makes its planned debut stock market listing in the country difficult, a comment that emerges as the latest of the excuses.
 
The CFO, in an interview with Reuters on Wednesday, said: “A $10.1 billion demand by Nigerian authorities from South African telecoms group- MTN, makes its planned debut stock market listing in the country ‘pretty challenging and awkward’”.Nigeria’s central bank has asked MTN to repatriate $8.1 billion in monies sent abroad, claiming that the funds were sent without proper certification, while it is also facing a $2 billion tax demand.

The notice of tax bill incurred over the last decade came days after the Central Bank of Nigeria ordered MTN’s Lagos-based unit to hand over $8.1 billion that it said was illegally sent abroad.Mobile operator MTN disclosed it had been in talks with Nigeria’s Attorney General about an investigation into tax compliance in a statement, outlining the background to the case of the money sent out of the country.
 
MTN, whose Nigerian business brings in a third of its annual core profit, said its total payment of around $700 million over the 10-year period fully settled the amount owing under the taxes in question.The latest demands came two years after MTN agreed to pay more than $1 billion to end a dispute with Nigeria over unregistered SIM cards.
  Shares in MTN dropped 5.6 per cent to 81.95 rand as of 1250 GMT at the weekend, bringing losses since last Thursday, when the central bank issued the $8.1 billion demand, to nearly 25 per cent.
 “These are old issues that have been investigated and closed, but now they are being reopened,” said Byron Lotter, a portfolio manager at Vestact, in Johannesburg.
 

“I’m not surprised that a lot of people are selling and saying ‘these guys are just too volatile, I’m out’. I wonder if MTN are thinking the same.”
 With the current political risk, which has continued to depress transactions on the equity sector of the NSE, operators had earlier doubted the possibility of MTN IPO and subsequent listing on the Nigerian Stock Exchange  (NSE) this year.
  They said that the IPO might not be feasible this 2018 by the way and manner MTN was going about the issue.
 

Specifically, the Managing Director, APT Securities and Funds Limited, Malam Garba Kurfi, said that MTN was dragging the issue because of the way and manner things were handled in the country.
 “I will not be surprise if they come with another excuse to shift the offer to next year, as there is nothing on the ground to confirm their seriousness,” he said.
 However, the Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, said recently that MTN must list on the NSE on or before May 2019.