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MTN plunges after Nigeria orders refund of R117bn dividend

Shares in the company plunged as much as 19% early on Thursday.
MTN's share price has slumped 21% this year to R107.34. Picture: Waldo Swiegers/Bloomberg

Nigeria ordered four banks including Citigroup and Standard Chartered to return $8.1 billion it says was illegally expatriated by mobile-phone company MTN Group over eight years through 2015. The wireless operator “strongly refuted” the claim.

The four banks, which include Nigeria’s Stanbic IBTC Holdings and Diamond Bank, will be fined about 5.9 billion naira (R230 million), Nigeria’s central bank said in an emailed statement Wednesday. MTN was also ordered to participate in the refund.

The order comes almost two years after Johannesburg-based MTN was first accused of the practice. Nigeria’s senate said in 2016 that it was investigating the same four banks for transferring almost R202 billion for MTN in breach of the country’s foreign-exchange rules, but last year the lawmakers ruled the wireless company hadn’t violated the law. MTN said in 2016 that it obtained central bank approvals before any dividends were issued.

“The re-emergence of these issues is regrettable as it damages investor confidence and, by extension, inhibits the growth and development of the Nigerian economy,” MTN said in a statement on Thursday. “We will engage with the relevant authorities and vigorously defend our position on this matter and provide further information when available.”

The decision will come as a blow to MTN, because the company has already settled a separate, R14.4 billion fine in Nigeria for missing a deadline to disconnect unregistered customers. Negotiations over that penalty went on for almost a year and weighed heavily on the share price, which has never recovered. As part of the settlement, MTN agreed to list its local unit in Lagos and is planning to do so this year. Citigroup is working on that plan.

Standard Chartered received the largest penalty Wednesday for transferring the biggest amount of R49 billion, with Citigroup responsible for R24.5 billion. Stanbic IBTC is engaging with the central bank over the issue, it said in a statement on Thursday. The other lenders didn’t immediately comment.

Nigeria is MTN’s biggest market with more than 54 million customers, out of 221 million worldwide. The share price has slumped 21% this year to R107.34, valuing the company at R202 billion, and touched eight-year lows earlier this month.

Shares in the company plunged as much as 19% early on Thursday. At 0713 GMT, the stock was down 14% at R92.12, recouping some of the losses after falling to a low of R86.99.

© 2018 Bloomberg

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This is why you cannot do business in Africa. Nigeria is broke-growth down badly so they do what they did last time around-they steal! they call it excon. Look at the mess the place is in-Lagos a hell hole-160m people living in squalor and no apartheid to blame-nearly 60 years of independence and Nigerian innovation, leadership and global competitiveness. No wonder that Trump fellow refers to these places as sh*th*le countries. Its -sadly-true.

All what happens is that these big global banks cut the credit lines to these failed states. Everything is goat behavior-eat the grass and then its all gone!

Maybe it’s why you can’t do business with MTN?
Nigeria hasn’t changed overnight and converting pigs to the trough into lambs to the slaughter just requires the arrogance of ignorance.
The truth will out no doubt.

I agree – there’s a reason why MTN was fined previously – THEY were at fault, not the country. Whilst I also agree that Nigeria is in a crappy state, I reckon MTN has been “pushing the envelope” as far as they can and it’s, once again, caught up with them. I guess that’s what will inevitably happen when you choose to operate in a country where corruption seems to be even worse than in SA. Don’t like the company – I had fraudulently opened accounts in my name with them (I don’t deal with them at all) and discovered it’s because of corruption that is, apparently very easy to commit due to their lousy systems. I reckon MTN must now “pay the piper”.

What nonsense….. MTN are the poster child for a good corporate citizen then?
How many global brands are doing business in Africa? 1 …2 ……? Hundreds if not thousands ……!!
Africa is a fantastic place to do business in, as long as you can plunder it for its resources, erect puppet governments who are bribed by the west so that they can continue to plunder, finance and arm opposition that often leads to civil war while the west still plunders. Don’t look at current day Africa and judge her without understanding what has led to many of Africa’s problems. Go and research the impacts of slavery on Africa. Research colonisation and the impacts on Africa. Research cash crops in Africa and how they brought about food instability and allowed western countries to control the markets. Research western control in African countries despite “independence” read up on King Leopold of Belgium and what he did in Congo. research the European influence on the Tutsi-Hutu relationship which later lead to the genocide in Rwanda ……Read up on German concentration camps in Namibia… research the drawing up of Africa’s borders by the west and how that has led to much of the modern day conflict. Look no further than the current middle east conflict, the breaking up of the Ottoman empire post the world war to again see a more modern example of western meddling that leads to on-going conflict.
If you are one of those who believes that mining for gold and metals in Africa only started when the white man set foot here, then your lack of knowledge about the continent that you call home is truly complete.
Its when people start agreeing with Trump that you realise how far and wide ignorance has spread……

All very good until you want your US Dollars.

That is why America and Europe ran away from Africa!

This is why we cannot do business in Nigeria.

What a terrible place to do business in.

MTN has built a formidable business in Nigeria and as is usually the case in Africa, someone with political connections want this goose and they will stop at nothing until MTN gives up and sells.

For sure, a formidable business. But “political risk” must be considered part of doing business in Africa. There is a risk premium for that, built into higher profit margins. Nothing wrong with it. MTN maybe failed to fully appreciate that type of risk?

You’ve hit the nail on the head! I’d say they want to nationalize MTN. They have a hard one for our businesses and assets simply because they can’t duplicate or even create such companies.

MTN for all intents and purposes built the cellphone industry of Nigeria, providing the ability to communicate to the masses in a country that had less than a million phone lines – with a population of 160 million.

Then Africans cant understand why people do not want to invest in the continent…

Nigeria a dump-filled with criminals starting with the President( a former dictator)

MTN taking too much risk playing in Iran and Nigeria-the global players avoided these places for a reason -no rule of law. MTN thought they understood the risk in doing business in these places -they have now lost about 2/3 of their market value.

Exit Nigeria and give them the finger!

Cyril Ramaphosa needs to step in and kick some Nigerian ass here. They cannot treat a South African corporation in this manner. Cyril needs to stop talking the talk – and take action here asap.
ps – I wonder if he or Patrice Motsepe owns any Mtn shares.

This is how you expropriate without compensation! Well done MTN

MTN disregarded the most basic risk/reward ratios in one of the most corrupt ”business cent’s” on the continent, unfortunately at the expense of various funds and shareholders.

Unfortunately they brought this over themselves as they also did not adhere to the agreement they concluded with Nigeria- that made them ”essay meat” and they must now just ‘shut up and pay up’.

MTN’s offers their services to private customers in 24 countries in Africa and even a extremely risky country like Iran….after this, they will have to ”re-look”their Operational strategy – BRIGHT as the Nigeria one turned out to be a bit ”dof” instead!

Another day in Lagos.

SA companies especially MTN should simply exit nigeria.

Do NOT invest in Efrica Mrs May.

I couldn’t agree more with the Nigerian authorities. Mtn.& Nigeria’s Stanbic IBTC Holdings and Diamond Bank, Citigroup and Standard Chartered should make a sizable contribution to the upliftment of the citizens in the country they trade in. That will make those business more welcome and friendly.

The Nigerian Government must be quiet and not give the South African Government any ideas.

End of comments.

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