• MTN has lost almost a quarter of its value on the JSE on Thursday after a shock announcement from the Nigerian central bank.
  • The bank demands that MTN pays back $8.1 billion in dividends that were moved out of the country.
  • This may convince MTN's CEO to exit the country.

MTN's latest massive setback in Nigeria – which wiped out almost R6 billion of its value in some 45 minutes – may be the final straw for the company to leave the country, an analyst says.

MTN’s share price crashed on Thursday after the Nigerian central bank claimed that MTN had moved dividends out of the country illegally, and demanded that it pay back $8.1 billion (R118 billion) – more than half its market value.

A number of banks were also fined for their participation in moving the dividends out of Nigeria.

This comes only two years after MTN was forced to pay almost $2 billion in fines for failing to cut off unregistered SIM cards in Nigeria.

Analysts say the cash-strapped Nigerian government is trying to milk MTN.

It started with the oil price collapse in 2014, which caused a massive cash crunch for the Nigerian government, says Casparus Treurnicht of Gryphon Asset Management.

"(The latest development) may convince Rob Shuter (MTN's relatively new CEO) that the company should cut its losses in Nigeria," he says.

MTN has 55 million subscribers in Nigeria – compared to only 31 million in South Africa – but that business has been plagued by setbacks.

Repatriating money from Nigeria to South Africa became trickier, and the shocker SIM-card fine sent the company into an 18-month tailspin.

“(With the) ongoing fines and operational issues, (it) feels like MTN are kicking the can down the road,” says Treurnicht.

MTN has been trying to list its Nigerian business since 2016, but the latest setback could prevent that, he thinks. 

“Before the regulator ticks all the boxes, MTN will have to deal with the new fine.”

Other SA companies, including Woolworths and Famous Brands, have closed operations in Nigeria in recent years.

Bright Khumalo, portfolio manager at Vestact asset management, says it is currently unclear whether MTN would exit Nigeria.

But the market is apparently already moving closer to putting a value of zero on the entire Nigerian business. According to one estimate, MTN without Nigeria is worth some R67 per share – and it is currently trading at R84, down from R234 four years ago.


Khumalo's colleague Byron Lotter described Thursday's announcement as a huge step backwards for Nigeria and another very disappointing turn of events for MTN.

“This is incredibly frustrating. There is no way that MTN would have been able to repatriate such a large amount of money without the central bank facilitating it all."

"This smells like a central bank that is not independent of a government that has big fiscal issues. Remember too that the Naira and the Rand have been crushed against the US dollar over that period. Pegging this amount in US dollar magnifies the issue for MTN," says Lotter.

"It is very strange that the regulator is ordering the dividends be paid to the central bank and not the company that paid them in the first place,” Chief Executive Officer Rob Shuter said, according to a Bloomberg report.

“MTN has also seen the letters to the banks which have been sanctioned and the regulator is asking them to repatriate the $8.1 billion. Not clear if they expect the money to be refunded twice. MTN and the banks?”

Still not a bargain

Even as MTN moves closer to its weakest levels in almost nine years, PSG Wealth portfolio manager Schalk Louw is still not buying.

"Today's developments must be seen along with the move from voice to data, and the fact that MTN's call charges are still much more expensive than international standards. The question then is where their growth will come from," he asks.

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