MTN Group Ltd. had its record fine in Nigeria increased $500 million to $3.9 billion after the country’s telecommunications regulator said it wrote the incorrect penalty in an earlier letter to Africa’s largest phone company.
“There was a typo,” Nigerian Communication Commission spokesman Tony Ojobo said by phone on Friday, referring to a letter dated Dec. 2 that reduced the original $5.2 billion penalty to $3.4 billion. “The reduction should have been 25 percent. We saw the mistake and had to fix it.”
The shares fell 3 percent to 135.74 rand at the market close in Johannesburg, the lowest in almost three and a half years, valuing the company at 251 billion rand ($17.5 billion). The stock has fallen about 30 percent since the fine was made public on Oct. 26.
The regulator imposed the penalty on MTN for failing to meet a deadline to disconnect 5.1 million unregistered subscribers as Nigerian security agencies seek to fight crime in a country with poor identity records. Chairman Phuthuma Nhleko is leading negotiations with the NCC after Chief Executive Officer Sifiso Dabengwa resigned. The initial fine of $5.2 billion was more than MTN’s sales in Nigeria in 2014 and the equivalent of about half the company’s total revenue.
Nigeria’s presidency approved the reduction of MTN’s record fine by 25 percent, showing goodwill toward the company after it breached the law and endangered security, according to Ojobo.
“The whole thing is shambolic,” John Ashbourne, Africa economist at Capital Economics in London, said by phone. “The size of the original fine was surprising. It’s even worse that they’re coming up with numbers on the fly, inaccurately.”
MTN isn’t prepared to pay the revised $3.9 billion fine and will continue to seek a compromise, according to a person familiar with the matter. The company received a second letter on Thursday which superseded the first letter and increased the fine from $3.4 billion, the Johannesburg-based company said in a statement on Friday. The payment date is Dec. 31.
“Neither the first letter nor the second letter sets out any details on how the reduction was determined,” MTN said. The company is carefully considering both letters, and Nhleko “will immediately and urgently re-engage with the Nigerian authorities before responding formally,” it said.
Nigeria is the company’s biggest market with about 63 million customers. It has about 223 million subscribers across 22 markets in Africa and the Middle East.
“What they need is big, non-oil companies investing in Nigeria — MTN’s an example of that,” Ashbourne said. “Independent of whether or not MTN should actually pay a fine, the way they’ve handled it has been ludicrous.”
Source:BloombergNigeria's $500 Million Typo Sends MTN Stock Plunging on Fine by Stellamaris Obomanu