Announcement regarding Central Bank of Nigeria (CBN) and the Nigeria Attorney General (AG) letter and renewal of cau
MTN Group Limited
(Incorporated in the Republic of South Africa)
Registration Number 1994/009584/06
Share code: MTN
("MTN Group" or “the Company”)
Announcement regarding Central Bank of Nigeria (CBN) and the Nigeria Attorney General (AG) letter
and renewal of cautionary announcement.
1. CBN CCI Matter
In the cautionary announcement of 30 August 2018, we communicated that MTN Nigeria
Communications Limited (MTN Nigeria) had received a letter on 29 August 2018 from the CBN alleging
that Certificates of Capital Importation (CCI) issued in respect of the conversion of shareholders loans
in MTN Nigeria to preference shares in 2007 had been improperly issued. Therefore, the CBN claims
that historic dividends repatriated by MTN Nigeria between 2007 and 2015 amounting to $8,1 billion
need to be refunded to the ‘coffers of the CBN’. We felt it appropriate to provide further background
on this matter and an update on progress to date.
For background on the CCI’s, Nigerian legislation provides that any person may invest in any enterprise
with foreign currency or capital imported into Nigeria through an Authorised Dealer which is then
converted into naira. Foreign currency imported into Nigeria and invested in an enterprise shall be
guaranteed unconditional transferability of funds through an Authorised Dealer in freely convertible
currency relating to dividends or profits attributable to the investment, and in respect of loan servicing
where a foreign loan has been obtained. For an individual or corporate entity in Nigeria to remit
dividends/loans/interest offshore, pursuant to their investment they are required to provide proof
that cash/equipment was brought into the country. The documentary evidence required by the CBN
for this proof is the CCI. The CCI is issued by the Authorised Dealer as evidence of the fact that the
investment was made and must be produced when any offshore remittance is made.
MTN Group and the original shareholders injected a total of $402, 625,419 into MTN Nigeria between
2001 and 2006 in the form of loans and equity. These initial inflows were the basis for the issuance of
various legacy CCI’s obtained from Authorized Dealers in accordance with regulations. The inflow of
capital has been confirmed by the CBN.
The CCI process is essentially in place both for the protection of investors as well as to provide the
CBN with documentary evidence for monitoring capital inflows and outflows. Although over time the
CCIs have been re-issued, consolidated and re-constituted to reflect the changing MTN capital and
shareholding structure, the amount of 402, 625,419, has remained the same.
One aspect of the changing capital structure was the conversion of shareholder loans to preference
shares. It is important to note that all the historic dividends were declared against valid equity CCI’s
and in fact no preference dividends were declared and no interest in respect of these preference
shares was paid.
2. AG Assessment of foreign Tax Compliance
In the context of the recent developments in Nigeria we felt it appropriate to update the market on
our engagement with the Attorney General (AG) and his investigation into tax compliance in Nigeria.
The Nigerian AG has in recent months been engaging various corporates in Nigeria on an assessment
of tax compliance relating to, inter alia, import duties, VAT and withholding taxes on foreign
imports/payments. In this process his office made a high-level calculation 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 and he requested MTN Nigeria to do a self-
assessment of the taxes in this regard that have been actually paid.
In August 2018 MTN submitted comprehensive documentation to the office of the AG. MTN Nigeria
has also completed an initial assessment of the full period which indicates that total payments made
to the tax authorities in regard to these foreign imports and payments in aggregate are $700 million.
There are valid reasons for the differences between the actual payments and the AG high-level
We were notified by the office of the AG last week that they have not accepted the documentation
presented and they have given notice of an intention to recover the $2.0bn from MTN Nigeria. Based
on the detailed review performed MTN Nigeria believes it has fully settled all amounts owing under
the taxes in question.
It is both regrettable and disconcerting that despite the historic engagements with the Nigerian
authorities by MTN Nigeria, the senate investigation into the CCI matter, and the multiple tax
assessments done by the Nigerian tax authority over many years that were satisfactorily concluded,
that these matters are being reopened.
MTN Nigeria will continue to engage with the relevant authorities on all these matters and we remain
resolute that MTN Nigeria has not committed any offences and will vigorously defend its position.
We will provide further information as and when available. Shareholders are accordingly advised to
continue to exercise caution when dealing in the Company’s securities until a further announcement
4 September 2018
Deutsche Securities (SA) Proprietary Limited
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