Nigeria’s $500m typo hits MTN
MTN’s shares take a knock after Nigeria increases fine due to mistake in penalty letter.
|||Johannesburg - MTN had its record fine in Nigeria increased $500 million to $3.9 billion after the country’s telecommunications regulator said it wrote the incorrect penalty in an earlier letter to Africa’s largest phone company.
“There was a typo,” Nigerian Communication Commission spokesman Tony Ojobo said by phone on Friday, referring to a letter dated December 2 that reduced the original $5.2 billion penalty to $3.4 billion. “The reduction should have been 25 percent. We saw the mistake and had to fix it.”
The shares traded 3.7 percent lower at R134.80 as of 11.38am in Johannesburg, the lowest since November 17. The stock has fallen about 30 percent since the fine was made public on October 26.
The regulator imposed the penalty on MTN for failing to meet a deadline to disconnect 5.1 million unregistered subscribers. Chairman Phuthuma Nhleko took an executive position in November and led negotiations with the NCC after Chief Executive Officer Sifiso Dabengwa resigned. The initial fine of $5.2 billion was more than MTN’s total sales in Nigeria in 2014 and the equivalent of about 37 percent of all the group’s revenue.
“The whole thing is shambolic,” John Ashbourne, Africa economist at Capital Economics in London, said by phone. “The size of the original fine was surprising. It’s even worse that they’re coming up with numbers on the fly, inaccurately.”
MTN received a second letter on Thursday which superseded the first letter and increased the fine to $3.9 billion, the Johannesburg-based company said in a statement on Friday. The payment date is December 31.
“Neither the first letter nor the second letter sets out any details on how the reduction was determined,” MTN said. The company is carefully considering both letters, and Nhleko “will immediately and urgently re-engage with the Nigerian authorities before responding formally”, it said.
MTN is working to further reduce the fine, a person familiar with the matter said on Thursday. Nigeria is the company’s biggest market with about 63 million customers.
“What they need is big, non-oil companies investing in Nigeria - MTN’s an example of that,” Ashbourne said. “Independent of whether or not MTN should actually pay a fine, the way they’ve handled it has been ludicrous.”
* With assistance from Renee Bonorchis and Paul Wallace
BLOOMBERG