Telecommunications & postal services minister Siyabonga Cwele has strongly suggested that the South African government stands ready to intervene on MTN Group’s behalf over the more than US$10-billion (R152-billion) in demands placed on the telecommunications provider by Nigerian authorities.
“We are talking to them (MTN) constantly. They are currently engaging and discussing with the authorities in Nigeria. They will tell us when they need us to intervene,” Cwele told TechCentral on Tuesday.
MTN has been left reeling by a one-two sucker punch by Nigerian authorities, who are demanding that $10.1-billion in “illegally” repatriated dividends ($8.1-billion) and “unpaid” back taxes ($2-billion) be returned to the troubled West African nation. Nigeria is MTN’s biggest market by subscribers, but the group has run into serious problems with regulators in recent years that have led to a collapse in its share price.
In the strongest comments on the situation yet by a South African political leader, Cwele cautioned that “we don’t think companies have this huge amount of cash”.
“The attitude that the telcos have this huge amount of cash that is just lying there (is wrong)… Yes, Nigeria is one of the biggest markets for MTN, but it’s like (it is) here in South Africa, it’s a difficult market because they have to service customers in difficult conditions.”
Cwele did not say what measures the South African government might take if asked to intervene on MTN’s behalf.
However, he said that operators like MTN should expect a “reasonable return on their investments”. They must invest in upgrading their infrastructure to newer broadband technologies to deal with consumer demand. “Those are things we have to consider as the regulator, as government, to say when people invest, they need a reasonable return on their investments.”
MTN has strongly denied accusations that it illegally repatriated dividends from Nigeria or that it owes $2-billion in back taxes. The group’s investors are scurrying for the exit, though, with its share price losing more than a third of its value since the Nigerian central bank demanded that four banks facilitate the return of the $8.1-billion of dividends taken out of the country between 2007 and 2015.
Listing in jeopardy
The developments have put MTN’s plans to float on the stock exchange in Lagos in jeopardy. The listing plan was part of an earlier agreement the group had reached to reduce a $5.2-billion fine after it failed to disconnect more than five million unregistered Sim cards under Nigeria’s equivalent of South Africa’s Rica legislation. MTN still had to cough up over $1-billion in penalties, making it one of the biggest regulatory fines ever imposed anywhere in the world.
MTN’s shares closed almost 3% down on Wednesday at R72. They have fallen by 35% in the past month and by 45% since the beginning of the year. Over five years, they have plummeted by 60%. — © 2018 NewsCentral Media
