Illegal Repatriation: MTN Group’s Share Price Crashes to Lowest in 9 Years

Following the news that its Nigerian subsidiary was caught up in a new regulatory mess,  MTN Group’s shares plunge to more than 23%. The Group’s Nigerian subsidiary, MTN Nigeria, has been accused by Nigeria’s CBN of illegally repatriating over $8 billion back to South Africa.

#MTN shares plunge, wiping almost $3bn off the company’s value, after #Nigeria‘s central bank orders it to transfer $8bn back to the country. MTN says the measure “damages investor confidence” and the Nigerian economy. https://t.co/Z6WAf3T6R1 … @malingha @LoniPrinsloo1 pic.twitter.com/SEqCfnCUrV

— Paul Wallace (@PaulWallace123) August 30, 2018

According to the CBN, MTN, using four banks, used forged Certificates of Capital Importation (CCIs) to convert shareholders loans in its Nigerian unit to preference shares in 2007. And under this guise, initiated transfers between 2006 and 2016. The CBN calls this a flagrant violation of extant laws and regulations of the Federal Republic of Nigeria.

In response, the apex bank slammed the affected banks with fines totalling N5.86 billion. These banks include Citibank, Stanbic IBTC, Diamond Bank, and Standard Chartered Bank.

CBN Fines Four Banks for Illegally Aiding MTN in Repatriating $8bn Forexhttps://t.co/xG1sOVpG5B

— David Afolayan (@aforisms_) August 30, 2018

In addition, the banking regulator ordered that the illegally repatriated funds must be refunded. That’s $8.1 billion must be transferred to Nigeria quickly or risk further actions.

MTN in a response, however, denied any wrongdoing. It claimed that the funds transferred during the period of scrutiny were approved by the Central Bank of Nigeria (CBN).

MTN Share Price Tanks!

Following the news of the sanction on the telco, the company’s stock price immediately crashed. By mid-day on Thursday, its shares, listed on the Johannesburg Stock Exchange, dropped to its lowest level since in nine years.

According to analysts, the $8.1 billion fund is more than half of the company’s market capitalization.

MTN pays hefty R5 billion sim fine @eNCA @VellyCisco @MTNNG @__MTNNG https://t.co/6EPPO9YsUd

— TechNext.ng (@technextdotng) April 10, 2018

This is the latest worry for the troubled MTN Group, particularly in Nigeria. Before now, the company had to battle and eventually negotiate its way out of a huge $1 billion fine. The telco got fined by the telecoms regulator, the NCC, for failing to deactivate unregistered SIM cards. In return for a lower fine, the company had to agree to list its Nigerian subsidiary on the Nigerian stock market. This is expected to happen later this year.

The latest crisis facing the telecommunication company seems a tough one to surmount. However, the Nigerian banks affected have started rallying and have said a meeting would be called to decide how to address the matter.