N780bn Fine: MTN Dangles Listing On Nigerian Stock Exchange
Ahead of planned renewed negotiations, MTN Group Ltd, yesterday, said that it has made a provision of N120 billion ($600 million) as payment to the federal government towards settling the N780 billion fine imposed on it by the Nigerian Communications Commission (NCC) for not complying with the SIM card registration guidelines . . .
At the same time, the telecommunication giant is dangling a carrot ahead of negotiations, saying that it planned to list on the Nigerian Stock Exchange (NSE) as soon as the matters are resolved amicably.
The MTN group executive chairman, Phuthuma Nhleko, while releasing the company’s financial results for the year ended December 31, 2015, said that the number is a provision “based on the judgement on the prevailing circumstances; it is not the number of finality.”
He said that MTN is confident that the penalty will be reduced.
“MTN’s auditors have required that the company make a provision in line with the International Financial Reporting Standards (IFRS). Discussions with the Nigerian authorities continue on the matter,” Nhleko said.
The provision, which includes a N50 billion ($250 million) good faith payment made last week February 24, accounts for about 15 per cent of the total fine, which was meted out to the company for missing a deadline to disconnect some subscribers. MTN may also reduce the 2016 dividend if more funds are needed to pay the fine, the company said.
He said that the MTN continues to engage with Nigerian authorities with the hope of reaching an outcome to the pending $3.9 billion fine “that will be acceptable to MTN. Clearly, 2015 was an exceptionally difficult year for the company; I would say the company’s most difficult in its history,” Nhleko further said.
Nhleko said that the Nigerian operation in particular experienced a very challenging year such as weak economic conditions, limited availability of the United States dollars, which contributed to a lower-than-expected performance, as well as heightened regulatory pressure all of which severely impacted MTN Nigeria.
Photo: Nigerian Stock Exchange
This was particularly evident in the suspension of regulatory services and the subscriber registration requirements which meant that MTN had to disconnect 6.7 million subscribers. MTN Nigeria is working hard to complete the registration process in line with the NCC’s requirements. It also agreed to withdraw the matter from the Federal High Court.
While negotiations with the regulatory authorities are ongoing, for the purposes of this results announcement, MTN Nigeria recorded a Rand 9 287 million provision for the fine at the end of the reporting period, negatively impacting the group’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) by 13.6 per cent and HEPS by 402 cents.
In the period under review, MTN Nigeria invested $94 million in renewing its 2G licences. It also concluded the acquisition of Visafone Communications. These developments, combined with the acquisition of a 4G/LTE licence and digital TV spectrum, highlight MTN’s long term commitment to improving the quality of broadband services, a national priority for the government.