MTN Group Ltd. is close to securing a deal with the Central Bank of Nigeria (CBN) over an order to repay $8.1 billion it is alleged to have illegally taken out of the country, confirming BusinessDay’s report of last month.
A settlement is expected by Monday but could come as early as today, according to a report by Bloomberg.
Sources close to both the CBN and MTN earlier told BusinessDay that results of a meeting held in October between both parties were positive, despite the fact that the outcome of the meeting was not made public.
The CBN is said to have received new documents in relation to the case and is looking at resolving it with all parties amicably.
Another source close to the CBN, however, told BusinessDay that even though the apex bank is looking at resolving the issue amicably, the decision by MTN to go to court was a ‘mistake.’
“The CBN has very wide powers that you must be careful to challenge legally,” the source told BusinessDay.
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If a deal is reached, MTN will probably dismiss its court case against CBN and attorney general, which it brought to stop the transfer order.
The CBN is also set to meet today with the four banks accused of facilitating the transfers — Standard Chartered Plc, Citigroup Inc., Stanbic IBTC Plc and Diamond Bank Plc, according to reports.
An end to the dispute would come as a relief for MTN, Africa’s largest wireless carrier by subscribers.
The Johannesburg-based company has lost almost a fifth of its market value since Nigerian authorities said in late August that it needed to repay the $8.1 billion.
MTN and the four banks, which have been fined $16 million between them, deny any wrongdoing. However, the company is also facing a claim that it owes $2 billion in back taxes in Nigeria, its biggest market.
The firm’s battles with Nigerian authorities over the $10 billion in repatriated funds and back taxes could increase risk in South Africa’s financial system, the country’s Reserve Bank said this week.
MTN running crisis in Nigeria has already shaken the company’s share price and resulted in about 20 per cent of the value of the pension fund of teachers in South Africa being wiped away.
The “near-term repatriation of the funds to the Nigerian authorities could affect MTN’s ability to continue meeting its debt obligations, including those in the South African banking sector,” the South African Reserve Bank said in its Financial Stability Review released in the capital, Pretoria.
“Given the interconnected nature of the financial system, that could increase systemic risk.”
The claims amount to almost all of MTN’s market value of about $12 billion, SARB said.
That could also lead to a “worst-case scenario” of MTN pulling out of Nigeria, which would increase the company’s exposure level to reputational risk, it added.
The shares traded 2.93 percent lower at 262.0 rand at the market close on Thursday, valuing the company at 163.7 billion rand ($12 billion).
Recently the Nigerian finance minister told a large conference in Abuja that the crisis has been damaging to Nigeria after it became obvious that investors around the world had taken a dim view of Nigeria’s handling of the matter.
Nigeria’s hopes to raise an additional $2.5bn in Eurobond before the end of the year and it is now believed that apart from the impact of the up-coming elections in Nigeria, the bungling by the government of the MTN matter will mean that Africa’s largest economy will pay a higher price for the bond as investors demand a higher premium for the risk in betting on Nigeria.
LOLADE AKINMURELE
