MTN fine part payment seen boosting investor confidence

The moves by MTN Nigeria to settle a fine placed on it by Nigerian authorities through a part payment of $250 million and continued negotiations is seen as a win-win for both parties and potentially boosting investor confidence in the country.

This is as President Muhammadu Buhari on Tuesday, said that the Federal Government is in talks with MTN over the $3.9 billion fine imposed on it for failing to disconnect unregistered sim cards, whilst arranging a gradual payment plan with the South African telecom giant.

Buhari disclosed this in a joint news conference with his South African Counterpart, Jacob Zuma who is on a two-day visit to Nigeria.

MTN paid $250 million (N50 billion) last week after dropping a legal case against the Nigerian Communications Commission (NCC).

“The move by MTN Nigeria to withdraw its lawsuit against the NCC and the N50bn paid in good faith should smooth out the path for negotiations to a favourable resolution for both parties. We however expect the Federal Government to apply a reasonable basis for any further review of the fine for the sake of setting precedence.

“While we are of the opinion that the issue may create a dent on foreign perception about the country, we believe a reasonable and timely resolution of the issue will result in a net positive for both the country and MTN Nigeria Limited,” an investment analyst speaking on condition of anonymity said.

MTN is Nigeria’s largest telecoms provider, with about 61.2 million subscribers.

Nigeria is suffering its worst economic crises since the return to democracy in 1999 as oil prices collapsed by 40 percent from its peak in 2014.

Growth has slowed to about half the levels of 2014, while the Central Bank has been forced to enact some form of capital controls to conserve foreign reserves.

A few foreign companies have also announced their exit from Nigeria in recent times, as a result of the hardship in getting dollars. These include South Africa based Clover and Truworth.

MTN Nigeria has however maintained that it has no intention of leaving the country.

“Despite its recent troubles, MTN has done exceedingly well in Nigeria,” said Rafiq Raji, principal at MacroAfricaIntel Investments Limited.

“President Zuma and Buhari should focus on the broader Nigeria – South Africa relationship,” Raji said.

MTN last week reported Full Year 2015 results that showed revenues were up 0.1 percent to R146.3 billion ($9.3 billion) and said it has set aside 9.3 billion rand ($600 million) to cover a potential settlement of the fine.

In the period under review, MTN Nigeria invested $94 million in renewing its 2G licenses.

It also concluded the acquisition of Visafone Communications, a 4G/LTE license and digital TV spectrum.

MTN Nigeria is the largest music distributor in Africa and its investments in Mobile Money and Africa Internet Holdings (which houses well-known brands like online retailer Jumia and real estate player Lamudi) provide an exciting platform for the next phase of evolution of the mobile telecoms sector.

The MTN Foundation has invested N18 billion in 550 projects and empowered more than three million people in communities across Nigeria since its inception and focuses on sustainable projects in three key areas – health, education and economic empowerment.

MTN will appear before the Nigerian Senate on tomorrow to shed more light on the part payment of the fine.