Shares in MTN spiked 5.26% after the company announced on Christmas Eve that it had settled a dispute with the Central Bank of Nigeria (CBN), signalling an end to a dispute that has negatively impacted Africa’s biggest mobile phone operator.
The operator announced on Monday afternoon that it will pay N19.2 billion – equivalent to $53.2-million or R777-million in a settlement with CBN.
In September, CBN demanded $8,1 billion (R115 billion) allegedly paid as a dividend to MTN to be refunded to it.
The money was transferred by Standard Chartered, Stanbic IBTC Bank, Citibank and Diamond Bank.
Standard Chartered was fined 2.4-billion naira ($7.86m), Stanbic IBTC Bank 1.8-billion naira, Citibank 1.2-billion naira and Diamond Bank 250-million naira.
The Nigerian government also handed MTN with a separate $2 billion tax bill.
The move resulted in MTN’s shares being hammered by the news. The shares sunk more than 20% on 30 August when the news broke that CBN has ordered four banks to refund the $8.1 billion. The company’s stocks have failed to recover lost ground.
This also derailed MTN plans for an initial public offering of its Nigerian division.
However, things are looking promising again for MTN.
The deal clinched with CBN paves the way for MTN to float its Nigerian unit. Nigeria is MTN’s biggest and most lucrative market.
On Thursday, MTN’s shares opened 5.26% higher at R90 driven by the news that Africa’s biggest mobile phone operator has resolved the dispute with Nigerian authorities, paring the drop since the crises erupted.
The shares of MTN, which was valued at R161 billion, closed 2.17% higher at R85.50 on Monday.
But an unresolved second allegation with the Attorney General of the Nigerian Federation (AGF) may be a drag on the price of MTN shares.
The AGF alleges that MTN owes $2-billion in back taxes.
The matter remains the subject of dispute and is due to be heard by a Nigerian court in February next year.
The AGF matter came up for initial mention before the Federal High Court of Nigeria Lagos Judicial Division on 8 November 2018 and has been adjourned to 7 February 2019.
“MTN Nigeria continues to maintain that its tax matters are up to date and no additional payment, as claimed by the AGF, is due, and consequently no provisions or contingent liabilities are
being raised in the accounts of MTN Nigeria for the AGF back taxes claim,” the company said.
In 2016, MTN was slapped with a $5.2 billion fine, which was later reduced to $3.9 billion and is still paying the Nigerian authorities.
MTN is also planning to diversify its revenue streams in Nigeria and tackle adjacent opportunities including banking.
The MTN Group will apply for a mobile banking license and launch a service in Nigeria in 2019, its CEO Rob Shuter, said last month.
This will further embed the South African telecoms company in its biggest but increasingly problematic market.
“We will be applying for a payment service banking license in Nigeria in the next month or so, and if all goes according to plan, we will also be launching Mobile Money in Nigeria probably around Q2 of 2019,” Shuter told a telecoms conference in Cape Town.