MTN Nigeria’s IPO Completion might be Delayed Due to latest fine

Plans to list MTN Nigeria on the local bourse could be threatened by the latest regulatory crisis the operator is facing.

Nigeria’s telecoms player MTN is at loggerheads with regulators over allegations of flouting regulatory procedures in foreign exchange transactions. MTN described the allegations as “false and based on completely false information.”

The fund that MTN was asked to return to Nigeria is more than half of MTN’s market capitalisation. The group’s shares plunged by over 20% following the latest announcement and sources at the company claim it could be a major setback to listing plans.

Officials at MTN complained the company’s IPO timelines and key events could be affected since it indicated that the IPO prospectus that had been prepared would have to be altered.

In a statement, MTN Group’s CEO Rob Shuter admitted that the implementation of the company’s IPO is subject to satisfactory market conditions and this event will potentially make it complicated for MTN to conclude the process.

“Despite this, we have instructed our advisors and our teams on the ground to continue at full pace,” he said.

This latest development is coming few years after another regulator slammed an industry record fine on the operator for failing to disconnect GSM lines with incomplete registration details.

The latest controversy is regarding a sum of over $8 billion which MTN reportedly repatriated from Nigeria with the help of 4 local banks that had been fined by Nigeria’s finance sector regulator, the Central Bank of Nigeria (CBN).

In a statement gotten by ITNewsAfrica, CBN alleged impropriety in the fund transfer, claiming the operator and its banks failed to receive regulator approval before transferring the sum of $8,134,312,397.63 out of Nigeria.

The regulator subsequently directed MTN to return the sum to its coffers. CBN said, “The CBN has asked the management of the banks and MTN Nigeria Communications Limited to immediately refund the sum of $8,134,312,397.63, illegally repatriated by the company to the coffers of the Central Bank of Nigeria.”

For their roles in the repatriation that happened between 2007 to 2015, the CBN slammed fines on the fingered commercial banks – Standard Chartered Bank, Citibank Nigeria Limited, Stanbic IBTC Bank Limited and Diamond Bank Plc.

Standard Chartered was fined NGN2.4 billion naira; Stanbic IBTC NGN1.8 billion, Citibank NGN1.2 billion; and Diamond Bank was slammed with a NGN250 million fine.

It would be recalled that Nigeria’s telecoms sector regulator, the Nigerian Communications Commission (NCC) in 2015 slammed MTN with a fine of $5.2 billion, the fine was later reduced to $1.7 billion after a series of negotiations including an agreement on the local listing of MTN Nigeria on the Nigerian Stock Exchange (NSE).

The latest fine has divided industry experts in the telecoms and finance sectors.
In South Africa, experts said the move by the CBN could discourage foreign investors from investing in Nigeria’s telecoms sector.

Peter Takaendesa, Cape Town-based portfolio manager at Mergence Investment Managers, told Sowetan Live the situation was untenable.

“Investors want certainty in terms of laws. There’s no way MTN will find $8 billion to put in Nigeria. There has to be a resolution,” Takaendesa said.

But in Nigeria, several supporters of the CBN move accused MTN of constantly flouting regulations.
One of the supporters of the fine is Senator Dino Melaye who spoke about MTN’s violations of fund repatriation rules.

He said: I have been vindicated with the CBN’s pronouncement on MTN. When I raised the issue in 2016, I was called all sorts of names. All figures and banks mentioned by me are exactly quoted by CBN. My prayer in that motion is exactly the resolution of CBN.”

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