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MTN is hoping that when President Jacob Zuma and his Nigerian counterpart, Muhammadu Buhari, meet this week, they can seek a resolution to the $3.9 billion (R61 billion) fine the telecoms company faces in Nigeria.
Addressing the media after presenting the group’s 2015 financial results last week, MTN executive chairperson Phuthuma Nhleko said he was unaware of any plans by Zuma to raise the matter of the fine with Buhari, but added it would not come as a surprise if the matter did come up for discussion.
“I guess it would not be a surprise to anybody if there was a resolution ... in a manner that is palatable and amicable to all parties, given the strong trade relations between Nigeria and South Africa. I think it is in everybody’s interests,” said Nhleko.
The Nigerian embassy in Pretoria did not respond to questions about Zuma’s visit.
Bongani Majola, Zuma’s spokesperson, declined to comment on whether the MTN fine would be up for discussion and referred City Press to the announcement of the state visit that would cover bilateral and trade relations.
Nhleko was speaking after the group posted what it called “unsatisfactory” results, which saw profits slump by 51% as headline earnings per share were recorded at 746 cents for the past year compared with 2014.
It was the spectre of the Nigerian fine, for which MTN has set aside R9.29 billion, that dominated when the results were presented at MTN’s headquarters in Randburg, Johannesburg.
Last week, MTN announced it had paid $250 million towards the fine to the Nigerian Communications Commission (NCC) as a goodwill gesture.
Nhleko said that once the issue of the fine was resolved, MTN would consider its options to list on the Nigerian Stock Exchange if the environment were conducive. The company later clarified that MTN might consider listing MTN Nigeria.
He fielded a volley of questions about the Nigeria debacle from investors and journalists attending the results presentation.
Since news of the fine broke in October last year, MTN’s share price has dropped by as much as a quarter, with investors at this week’s presentation citing the fine as having impacted heavily on investments.
The Public Investment Corporation, a major MTN shareholder, asked Nhleko whether noncompliance with the NCC instruction to disconnect 5.1 million unregistered subscribers was caused by weaknesses in MTN’s risk-management unit.
In response, Nhleko said reports about the MTN fine and the company’s noncompliance with Nigeria’s registration laws tended to “oversimplify” the matter.
He placed a huge part of the blame for MTN’s inability to meet the disconnection deadline last year on the registration process implemented by the NCC, but admitted MTN could have done things differently to avoid a fine.
Jyoti Desai, MTN’s group chief operating officer, said the company had been forced to invest heavily in infrastructure to make it easier to register subscribers, as there were “real issues on the ground” with the NCC’s registration process, which constantly changed.
At first, said Desai, the NCC approved “proxy” registration for third parties, but this was changed at a later stage, which complicated the registration process.
Nhleko said negotiations with the NCC would continue, but he would not reveal how much they were willing to pay, as they did not want to negotiate with the NCC through the media.
