Johannesburg
- MTN Group, Africa’s mobile giant, declined 2.25 percent on the JSE
after a Nigerian senator alleged that the company had illegally moved
more than $14 billion (R194bn) from that country, further damaging its
fragile reputation.MTN, which faced a fine fiasco in Nigeria earlier this year, slid 2.77 percent to trade at R106.93 a share at one stage yesterday after reports emerged that the company might have illegally moved more than the previously claimed $14bn out of that country.
“We have realised from preliminary investigations that it is actually outrageously higher than the original figure,” Melaye, the senator who raised the allegation last month, told reporters in the capital, Abuja, on Wednesday.
Another senator, Rafiu Ibrahim, who is the chairman of the committee that is leading the inquiry, said accountants and lawyers were also involved in the probe and were examining documents dating back 16 years.
MTN, Africa’s biggest wireless carrier by sales, denied the claims, with Reuters reporting that the company planned to present a comprehensive response to the latest accusations yesterday, spokesman Chris Maroleng said.
Two issues
Jon Tullett, the research manager at Johannesburg-based International Data Corporation, said there were two related issues at play in light of the allegations against MTN.
“Firstly, the allegation of improperly moving money from Nigeria... Secondly, the impact on reputational damage is the biggest concern for MTN,” he said.
Tullett noted that the investigation would be resolved, but its impact on consumer and investor confidence was likely to remain.
“It may be reflected in consumer behaviour,” he said, adding that MTN had to take drastic steps to maintain its reputation. “Regardless of the outcome of the investigation, there will be fallout,” he said.
Tullett said investors should not be alarmed that MTN’s share price dropped by almost 3 percent. “There are people who expected the share price fall by a bigger margin. A decline of between 2 percent and 3 percent is not unusual,” he said.
Nigeria’s upper house of parliament agreed last month to investigate whether MTN unlawfully repatriated $13.92bn between 2006 and 2016. This comes four months after MTN agreed to pay a $1.1bn fine in cash to the Nigerian government and list its local unit on the country’s stock exchange after about eight months of negotiations.
Nigeria imposed the penalty after MTN missed a deadline to disconnect 5.1 million customers unregistered in a country that is battling an Islamist insurgency. In addition to its woes in Nigeria, MTN is also struggling to repatriate about R15.4bn from Iran following the lifting of US-led sanctions.
MTN shares have fallen more than 43 percent since the fine was first reported a year ago, allowing crosstown rival Vodacom Group to overtake the company in terms of market valuation. The record penalty led to the resignation of chief executive Sifiso Dabengwa, with the company appointing Rob Shuter as its new group president.
