Stock investors price-in MTN new risk from Nigeria

The shares of MTN Group Limited were on offer Tuesday at the Johannesburg Stock Exchange (JSE) as its Nigerian business faces new risks resulting from allegations emanating from the Nigeria’s National Assembly.
MTN Group Limited’s shares slumped the most in three months after Nigerian lawmakers raised new allegations about the wireless carrier, this time accusing the company of illegally moving huge dollars out of its largest market that is facing dollar scarcity.
Nigerian Senate on Tuesday resolved to investigate allegations of $13.92 billion illicit financial flow alleged to involve the telecommunications company and four banks.
MTN shares fell as much as 4.4 percent, what would be the biggest fall on a closing basis since June 27, and traded 3.4 percent lower at 119.77 rand as of 1:32 p.m. in Johannesburg. That values the company at 221 billion rand ($16.3 billion).
The stock of MTN has fallen more than 37 percent since the fine was first reported in October, allowing cross town rival, Vodacom Group Limited to overtake the company in terms of market valuation.
The Nigerian Senate’s resolution followed a motion by Dino Melaye (APC-Kogi West) who said MTN connived with “some influential and unpatriotic Nigerians” to illegally repatriate the money of Nigeria between 2006 and 2016, in violation of the Foreign Exchange (Monitoring and Miscellaneous) Act.
The accusation comes a little over three months after MTN agreed to pay a N330 billion ($1 billion) fine in cash to the Nigerian government and list its local unit on the country’s stock exchange after about eight months of negotiations.
The accused banks and amounts alleged to have illegally repatriated are: Stanbic IBTC ($4.87 billion), Standard Chartered Bank ($5.72 billion), Citi Bank ($2.98 billion) and Diamond Bank plc ($0.35 billion).
Melaye said the Central Bank of Nigeria was not also notified of the capital flight within 48 hours as required by regulations. Nigeria’s Senate will thoroughly investigate the claim, it said on its Twitter account on Tuesday.
The Johannesburg-based company, Africa’s biggest wireless carrier by sales, is accused of repatriating the funds over ten years, starting in 2006, according to Melaye, the politician who made the motion.
“It’s not a good thing for MTN that there is a lot of noise being made again around corporate governance,” according to Sasha Naryshkine, an analyst at Johannesburg-based money manager Vestact Limited. “It’s difficult to move money out of the country illegally as it has to be moved through the central bank.”
MTN shares had fallen earlier on Tuesday, after the Nigerian telecommunications regulator blocked the carrier’s attempt to take over internet spectrum owned by closely held Visafone, which it had agreed to buy in January.
MTN is trying to add capacity to extend internet access in Nigeria and South Africa as revenue from voice services declines. “It’s one mess after the other for MTN in Nigeria again today,” Naryshkine said.

 

Iheanyi Nwachukwu