MTN: 10,530 +278 (+2.71%)
Nigeria's $8.1bn demand cast doubts over MTN's Nigeria IPO plans - sources
(Adds MTN's chief executive comment)
By Chijioke Ohuocha and Alexis Akwagyiram
ABUJA/LAGOS, Sept 1 (Reuters) - MTN Group's plan to
list its Nigerian unit in an initial public offering this year
is under threat after the central bank ordered the South African
telecoms giant to hand over $8.1 billion allegedly sent abroad
illegally, sources said.
Nigeria's central bank alleged that MTN used improperly
issued certificates to transfer funds out of Nigeria after the
telecoms giant converted shareholder loans in its Nigerian unit
to preference shares in 2007. MTN denies the allegations.
The monetary authority said MTN's banks had failed to verify
that the telecoms group had met all the country's foreign
The money is more than half of MTN's market capitalisation.
MTN Group shares plunged as much as 25 percent to a nine year
low on Thursday after the allegations were levelled by Nigeria's
Africa's biggest telecoms company had previously said it
aimed to list this year in its largest market, the continent's
most populous country of 190 million people, as it seeks to
expand mobile services to boost margins and access new revenue
But three people familiar with the matter said the scale of
the central bank's demand affects the market conditions, casting
into doubt the likelihood that the process would be completed by
the end of the year, if at all.
"It will affect our timelines and key events," said one of
the people familiar with the matter, who did not want to be
The person said the development meant the IPO prospectus
that had been prepared would have to be altered.
In an emailed statement, MTN Group Chief Executive Rob
Shuter said: "The implementation of our IPO has always been
subject to satisfactory market conditions and this event will
potentially make it complicated for us to conclude the process.
"Despite this, we have instructed our advisors and our teams
on the ground to continue at full pace," he said.
Earlier this year Shuter told Reuters plans for the Nigerian
listing were at an advanced stage and it should be concluded
this year if market conditions are appropriate.
The demand by Nigeria's central bank is the latest setback
for MTN in Nigeria, coming two years after it agreed to pay more
than $1 billion to end a dispute in Nigeria over unregistered
Nigerian banks are set to hold a regular meeting soon at
which they will discuss the payment and how to "engage
government and regulators to resolve the issue," according to
Access Bank Chief Executive Herbert Wigwe.
(Additional reporting by Tanisha Heiberg in Johannesburg
Editing by Alexandra Hudson and Ros Russell)
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