When MTN’s share price hit historic lows of R69 on September 17, 2018, no one could have predicted that within a few short months the share price would recover to R99.47 at close of trade on May 29 this year. However, it’s still a far cry from historical highs of R260 last reached in September 2014.
With over 233 million customers across 23 different business units, MTN is Africa’s largest telecommunications firm but, since 2017, has managed to get on the wrong side of the Nigerian government.
Fresh off listing on the Nigerian Stock Exchange on May 16, with a valuation of just over US$5.5 billion, MTN Nigeria’s share grew by 40% with a listing value second only to Dangote Cement. Its glory days post listing soon dissipated as it was announced on May 27 that Nigeria’s Economic and Financial Crimes Commission would be investigating the listing.
To provide some context, the history of MTN in the Nigerian market can be summarised as follows:
· In 2001, the company launched its Nigerian operations and quickly became a large player in the African country’s market.
· In 2015, MTN was fined by the Federal Government of Nigeria through the Nigerian Communications Commission for not meeting the deadline for Mobile Network Operators to disconnect Subscriber Identification Modules with improper registration.
The initial fine was just over US$5 billion but later reduced to US$1 billion with a commitment from the company that it would list on the Nigerian Stock Exchange and increase local ownership.
The fine led to a sharp decline in the share price along with an exodus of executives including group CEO Sifiso Dabengwa, head of Nigeria operations Micheal Ikpoki, and head of Corporate Affairs, Akinwale Goodluck. They were replaced with Phuthuma Nhleko, Ferdi Moolman and Amina Oyegbola as new chairman, managing director and head of Corporate and Regulation respectively.
· In 2018, Nigeria’s attorney-general handed MTN the $2 billion demand for backdated taxes, as a result of a preference share matter. The case has since been postponed to June 26.
· In 2019, MTN resolved a tussle with Nigeria’s central bank where a fine was reduced from $8.1 billion to $53 million — while also setting up bullish financial targets for the company.
As a remedy to some of the regulatory issues, the company appointed former Nigeria central bank governor Lamido Sanusi to its board ahead of the listing in Nigeria.
Then, in an even a bolder play, MTN announced an International Advisory Board (IAB), chaired by His Excellency former President of the Republic of South Africa, Thabo Mbeki, and constituted by the following individuals too:
· His Excellency President, John Kufuor, former President of Ghana
· Dr Aisha Abdullahi, former African Union commissioner for Political Affairs
· Dr Mohammed ElBaradei, former director-general of the International Atomic Energy Agency
· Dr Momar Nguer, president of Marketing & Services Total SA (France)
· Phutuma Nhleko, former MTN Group Chairman
According to the company, the primary purpose of the IAB will be to counsel, guide and support the MTN Group from time to time in fulfilling its vision and objective of being one of the premier African telcos with a global footprint and contributing to increased digital inclusion in Africa and the Middle East.
Regardless of the PR spin, one wonders why specifically a telecommunications firm would appoint a group of politicians to a board wherein they’re not subject to the fiduciary duties and scrutiny subjected to executive office bearers such as members of the board.
Furthermore, with the announcement of this latest investigation, one wonders if these political appointments were meant to intervene or assuage the situation. For now, this dust of action is all MTN stakeholders have as consolation.
Sinesipho Maninjwa is a CA(SA) and financial commentator.