Nigeria has suspended talks with MTN Group about a $3.9 billion fine on the South African mobile-phone company indefinitely while the country’s House of Representatives completes an investigation into the nature of the penalty.
The lawmakers “have set up a committee to investigate the MTN saga and they are still on it,” Victor Oluwadamilare, spokesman for Nigeria’s Ministry of Communications, said by phone from Abuja, the capital, on Friday. “Until they are through with it, nothing can be done.”
The delay will frustrate Johannesburg-based MTN as it seeks to resolve a fine that was levied in October for missing a deadline to disconnect customers deemed unregistered in the country, which is battling an Islamist insurgency. The company’s stock has fallen by almost a third since the penalty was made public, costing MTN the title of Africa’s biggest wireless company by market capitalization to crosstown rival Vodacom Group.
“Any delays in finding a resolution for the MTN fine will play into trading and keep MTN’s share price suppressed,” Peter Takaendesa, an analyst at Mergence Investment Managers, said by phone from Cape Town on Monday. “The big event to watch this week will be MTN’s annual general meeting, where the market might also get additional clarity.”
Stuck in Limbo
Executive chairman Phuthuma Nhleko returned to the helm in November for a six-month term to resolve the crisis, yet he remains in charge having not fulfilled his mandate. He will address shareholders at the annual meeting in Johannesburg on Wednesday.
“The federal government, the Nigerian Communications Commission and the ministry of communications can do nothing about the MTN case until the committee concludes its thorough investigation,” Oluwadamilare said. “There’s no point dealing with a particular organisation from different fronts. It would be counter-productive.”
MTN’s last reported offer was to pay $1.5 billion in a combination of staggered cash payments, sovereign debt purchases and access to its network. The company is Nigeria’s biggest mobile-phone company, and in turn the country is the largest of MTN’s 22 markets across Africa and the Middle East.
“This suggests that MTN might still be stuck in limbo that is not a good thing for them,” Dobek Pater, managing director at Johannesburg-based Africa Analysis, said by phone. “Suggestions were that the negotiations were going on in a positive path for MTN, especially when the company received that first reduction. Now, with the investigation the process is back to the unknown.”