MTN Group Ltd.’s battles with Nigerian authorities over $10 billion in repatriated funds and back taxes could increase risk in South Africa’s financial system, the Reserve Bank said.
Africa’s largest wireless carrier by subscribers is facing mounting pressure to return $8.1 billion to Nigeria after its central bank argued that the Johannesburg-based company had repatriated funds illegally. Separately, the West African nation’s attorney general’s office alleges the company owes $2 billion in back taxes.
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 Wednesday 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.
Nigeria’s central bank alleged in late August that MTN and four banks -- Standard Chartered Plc, Citigroup Inc., Stanbic IBTC Plc and Diamond Bank Plc -- illegally repatriated the money from Nigeria. MTN sought an injunction in early September to buy itself time to fight the claim in its biggest market, which has wiped 18 percent off its market value within two weeks.
The shares traded 0.6 percent higher at 89.50 rand at the market close on Wednesday, valuing the company at 169 billion rand ($12.1 billion).
Have your say
More Business Headlines
- Inlaks, Moven Enterprise partner to provide innovative financial solutions
- Gov't commended for launch of procurement Ethics and Standards Committee
- Cedi depreciation: Akufo-Addo blames taste for imported goods
- AirtelTigo offers industry’s first: data that doesn’t expire
- Govt secures record bids for its Eurobond
- Turkish gov’t to scale up investment to $1b with special interest in Agric, Tourism
- Vodafone Ghana launches 4G services
- Nestle Ghana achieves 12.8% volume growth in 2018
- MTN launches 8th edition of Twin City Fest
- Time to invest in Africa is now – Bawumia woos investors
- Boeing expects 737 Max software fix by end of March
- Gov't expresses confidence in insurance recapitalisation process
- Accra Mall to introduce Family Club
- Eurobond pricing expected on Tuesday as Ofori-Atta ends London Roadshow
- Tony Elumelu Foundation to announce selected entrepreneurs for 2019 programme