MTN says it will forge ahead with a listing of its Nigerian business despite an ongoing dispute with authorities in that market that has shaved off nearly R40bn of the group’s market capitalisation.

The mobile operator agreed to a listing of its 79%-held Nigerian unit as part of an earlier settlement with regulators after it failed to disconnect unregistered Sim cards.

But new claims from Nigeria’s central bank and attorney general, worth a combined $10.1bn (R146bn), have cast doubt over those plans.

The Central Bank of Nigeria has said it wants MTN to return $8.1bn of “illegally” repatriated dividends and the attorney- general says the company owes $2bn in taxes.

Nigeria's demands have done little to help that country's reputation as an attractive investment destination. Officials in the west African country have already admitted that the MTN saga has weighed on sentiment.

The demands sent MTN’s shares crashing from R107.34 in late August to below R70 by mid-September. At those levels, the market effectively values MTN Nigeria at zero.

“MTN Nigeria’s plans to list have been challenged by the recent … matters, however, MTN remains committed to the listing in Nigeria and work continues in this regard,” CEO Rob Shuter said in a statement on Monday.

However, the listing was highly unlikely to happen until the dispute was resolved, said Philip Short, portfolio manager of the Old Mutual Top Companies Fund.

While MTN may be looking to list only a small portion of the Nigerian business, management was probably taking a flexible approach to the share sale, Short said.

“One could argue for some sort of strategic rationale where you list a bit more of the business to get better buy-in from locals so that you don’t have the regulator pushing you around so much.

“...But at the end of the day you want to retain as much ownership as possible.”

MTN said in its statement it remained “resolute” that it had not committed any offences. It would “continue to defend this position vigorously”.

The mobile operator also said it added 2.5-million subscribers across all markets in the three months to end-September, taking its total customer base to 225.4-million.

“That was a bit weaker than we expected — we were looking for a number closer to 4-million,” said Imtiaz Suliman, portfolio manager at Sentio Capital.

Nevertheless, MTN reported that group service revenue rose by 10% year on year, ahead of its own medium-term target of upper single-digit growth.

Tepid service revenue growth of just 3% in SA was offset by stronger gains in Nigeria, Ghana and Iran.

In Nigeria, service revenue rose by 17.4%.

“This shows that they are benefiting from 9Mobile being in disarray and they’re taking some market share, but the bigger elephant in the room is the impasse in Nigeria,” said Suliman.

“I think the most likely case is the central bank asked for $8.1bn but they’ll settle on something lower,” he said, adding that it was possible there could be some merit to the central bank’s claims. (BusinessDay SA)

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