The shares of the MTN Group dropped as much as 23 per cent to a nine-year low, yesterday, a day after the Central Bank of Nigeria (CBN) ordered the telecoms firm to repatriate $8.1 billion alleged to have been sent abroad illegally.
The News Agency of Nigeria (NAN) reports that at trading on the Johannesburg Stock Exchange, MTN shares were down 21.4 per cent at 84.35 rand, after touching 83 rand, a level last seen in 2009.
The CBN’s demand is the latest setback for MTN Nigeria, the South African group’s most lucrative but increasingly also its most problematic market.
It comes two years after MTN, Africa’s biggest telecoms company, agreed to pay a fine of more than $1 billion for allowing the use of millions of improperly unregistered SIM cards on its network.
But in a statement, MTN Nigeria refuted the CBN’s claim in strong terms.
Signed by its public relations manager, Funso Aina, MTN said it received a letter on August 29 from the CBN alleging that the Certificate of Capital Importation (CCI) issued in respect of the conversion of shareholders’ loans in MTN Nigeria to preference shares in 2007 had been improperly issued, and that consequently, the historic dividends repatriated by the telecommunications firm between 2007 and 2015 amounting to $8.1 billion needed to be refunded to the apex bank.
It claimed no dividends have been declared or paid by the Nigerian arm other than pursuant to CCIs issued by its bankers with the approval of the CBN as required by law.
He explained that the issue surrounding the CCIs has already been the subject of a thorough enquiry by the Senate of Nigeria.
According to him, “in September 2016, the Senate mandated the Committee on Banking, Insurance and other Financial Institutions to carry out a holistic investigation on compliance with the foreign exchange (monitoring and miscellaneous) act by MTN Nigeria and others.
In its report issued in November 2017, the findings evidenced that MTN Nigeria did not collude to contravene the foreign exchange laws and there were no negative recommendations made against MTN Nigeria.”
Aina said MTN Nigeria, as a law-abiding body, is committed to good governance and to abiding by the extant laws of the Federal Republic of Nigeria.
Promising to “engage with the relevant authorities and vigorously defend our position on this matter and provide further information when available,” MTN, however, added: “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.”
This concern was re-echoed by Greg Davies of boutique investment house, Cratos Capital, in Johannesburg, who noted: “You just can’t do business in an environment where these type of things are going to happen.”
The CBN’s director of corporate communications, Isaac Okorafor, said on Tuesday that investigations specifically revealed that $3.45 billion was allegedly repatriated by Standard Chartered Bank on the basis of illegally issued CCIs.
Similarly, “$2.63 billion, $1.76 billion and $348.9 million were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc between 2007 and 2015.”
Okorafor said the investigations by the CBN in March 2018 became necessary, following allegations of remittances of foreign exchange with irregular CCIs issued on behalf of some offshore investors of MTN Nigeria.
Already, the CBN has ordered the managements of the four banks and MTN Nigeria to immediately refund the $8.1 billion allegedly repatriated by the company to the coffers of the apex bank.
Figures obtained from the CBN yesterday showed that the highest fine of N2.47 billion was slammed on Standard Chartered Bank, while Stanbic IBTC Nigeria got N1.88 billion. Citibank Nigeria is to pay N1.26 billion and Diamond Bank N250 million.
The CBN investigation further revealed that on account of the illegal conversion of MTN shareholders’ loan to preference shares (interest free loan) worth $399.5million, the company illegally repatriated $8.13 billion.
Okorafor said the investigations were thorough and allowed all the parties a fair hearing. He advised banks and multinational companies in Nigeria to adhere strictly to extant regulations in their foreign exchange transactions.
IATA Forecasts Airlines Will Generate $3b More In 2019
The International Air Transport Association (IATA), which represents most global carriers, has forecast airlines will generate $3 billion more in total profits in 2019. The industry realized $32 billion this year. IATA says although airlines face increased taxes, they will carry more passengers next year that would boost industry profits.
Iata says airlines in North America are performing the best, but Africa remains the weakest region for aviation.
Net profits for airlines across Africa are expected to fall, for the fourth consecutive year next year by three-tenths of a percent.
Losses for carriers across Africa have widened as fuel costs have increased.
CBN And MTN Plan To Settle $8b Rift Out Of Court
It seems as though the Central Bank of Nigeria and telco giant, MTN, are trying to find ways of resolving the $8 billion rift between them. One of MTN’s lawyers is quoted as saying they are making moves toward an out-of-court settlement.
Meanwhile, counsels for both parties have secured another adjournment until late January.
Another $2 billion case involving MTN and the Nigerian attorney general’s office was adjourned as well last week until early January. This case is related to alleged back taxes owed by MTN. The telco giant has denied it owed the taxes.
The $8 billion case was a result of a charge against MTN for allegedly violating Nigeria’s extant laws. In August, Central Bank of Nigeria sanctioned MTN Nigeria for allegedly using irregular certificates of capital importation to transfer $8.1 billion to South Africa on behalf of its offshore investors.
MTN is being asked to return the $8.1 billion to Nigeria.
Mtn group’s Nigerian operations account for one-third of its entire African market share.
Moody’s Tags Namibia Risky For Investment
Instead of Namibia regaining a positive investment grading, Moody’s rating agency has declared the country as speculative. The rating agency says, although there are improving prospects for economic growth, it is still risky to lend to the country.
So, Moody’s has affirmed the ba1 rating of the country, maintaining a negative outlook.
The ba1 rating reflects Namibia’s gradually improving medium-term growth prospects and moderate wealth levels that support the economy’s capacity to absorb shock.
In an announcement on its website, moody’s also projected a three and a half percent growth in gross domestic product and a GDP growth of one percent next year. It says these growth projections are supported by developments in the diamond industry, the tourism sector, and logistics.
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