MTN Group in Nigeria to be at court on Feb 7, Company’s deal fails to fuel share

MTN Group executives may have expected investors to cut them a little slack after they got potential liabilities of USD 8.1 billion in Nigeria reduced to USD 53 million last month.

MTN stock has escalated just 2.8 percent since the settlement on December 24, still 20 percent below its price in late August. That’s when Nigeria’s central bank first alleged that the Johannesburg-based wireless carrier had illegally repatriated funds from its biggest market.

MTN confronts a Nigerian court hearing on February 7 over a separate claim that it owes USD 2 billion in back taxes, which it disputes. There’s also the memory of an earlier, USD 1 billion Nigerian fine levied on the company for failing to disconnect subscribers without proper registration.

“The market is wondering when or if the Nigerian government will want to raid the MTN piggy bank again. The market is asking when will this stop. It’s only two years since the last falling out,” Nicholas Kunze, a money manager at Sanlam Private Wealth opined.

MTN is the mobile market leader in Nigeria with about 66 million customers, so it’s also vulnerable to broader risks facing Africa’s biggest oil-producing nation, such as a tumbling oil price and next month’s presidential election.

The company is now uninvestable, according to Karin Richards, an independent trader based in Cape Town. “Apart from anything else, the constant claims, all for massive amounts, must be absorbing an extraordinary amount of management time,” she said, as reported by Bloomberg.

The shares traded 0.4 percent higher at 9:29 am in Johannesburg Monday, valuing MTN at R165 billion.