Posted by News Express | 28 December 2018 | 1,099 times
Shares in South African telecoms giant MTN jumped 8 percent on Thursday after it settled a row with Nigeria’s central bank for a fraction of the $8.1 billion it had threatened to cost.
MTN announced on Monday that it would pay just $52.6 million to end the dispute in Nigeria, its biggest and most lucrative market, but also its most troublesome.
The case had dogged MTN, Africa’s biggest telecoms company, for four months, dragging its share price down 20 percent to hover around its lowest level since 2009 while also sparking pessimism around the ease of doing business in Nigeria.
It centred on allegations that dividends paid by the firm between 2007 and 2015 were based on improperly issued certificates.
The Central Bank of Nigeria (CBN) had initially ordered MTN and its lenders to bring back $8.1 billion it alleged the company had illegally repatriated to South Africa during that time.
But after MTN provided additional documents, the central bank concluded only one 2008 private placement, worth around $1 billion, was irregular. MTN agreed to pay $52.6 million as a “notional reversal” of this transaction.
“MTN Nigeria will pay the notional reversal amount without admission of liability,” it said in a statement on Monday, announcing the settlement.
The central bank’s initial order threatened to wipe out more than half of MTN’s market capitalisation at the time it was issued in August, and spooked investors just as the company was trying to reassure them of its frontier market-focused strategy after a series of costly legal problems.
MTN shares were up 4.34 percent to 89.21 rand at 1055 GMT on Thursday, after rising more than 8 percent to highs of 93 rand in the first trading session since the settlement was announced. (Reuters)
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