Mobile group MTN continued to take pain on Wednesday (12 September), as its share price dropped a further 2.9% to trade under R70 a share – its lowest point since October 2006.
The operator is under immense stress after Nigerian authorities demanded the group pay back over $10 billion – $8.1 billion in alleged aunathorised dividend expatriation, and a further $2 billion fine related to back-taxes.
MTN has denied both claims.
At the start of September, the Central Bank of Nigeria (CBN) alleged improper dividend repatriations by MTN Nigeria and requested that $8.1 billion be returned “to the coffers of the CBN”, which sent the mobile operator’s share price crashing 20% at the time. The share was trading around R107 a share before the crash.
The CNB accused MTN and lenders of “flagrantly violating foreign-exchange violations” in taking cash out of the country over eight years through 2015.
MTN’s woes were then exacerbated a week later, when the Nigerian Attorney General (AG) said an assessment of tax compliance found that MTN Nigeria should have paid approximately $2.0 billion in taxes relating to the importation of foreign equipment and payments to foreign suppliers over the last 10 years.
This announcement sent MTN’s shares crashing yet again.
MTN has since applied to the Federal High Court of Nigeria for ‘injunctive relief’ to protect its assets from the CBN and the Attorney General.
On Wednesday (12 September), MTN accused the the Attorney General of overreaching with the back-taxes claim, saying that he “ought not to have undertaken an unauthorised process which has caused undue, unwarranted and untold injury to” the company’s reputation.
According to reports, MTN is now seeking 2 billion naira ($5.5 million) in damages and a further 1 billion naira in legal costs.
At 11h00, the MTN share price was at R69.95 a share. The group’s share price is down 47% from R133 at the start of the year, giving it a market cap of R131 billion – which is smaller than the Nigerian fines combined (R152 billion).