August 30, 2018 / 2:25 PM / 8 months ago

Breakingviews - Nigerian problems cast doubt over MTN payout

Thousands of Nigerian traders and shoppers throng an outdoor market in Oshodi road in Lagos April 18, 2003. REUTERS/Juda Ngwenya

LONDON (Reuters Breakingviews) - MTN Group is facing another nasty surprise in Nigeria. It’s three years since regulators fined the South African mobile operator $5 billion for failing to cancel dormant accounts. Now the country’s central bank has ordered MTN’s local unit to repay $8.1 billion sent to its parent company since 2007. However the saga plays out, the company’s plan to boost future dividends looks in doubt.

The regulator’s claim, unveiled in a combative statement on Twitter on Wednesday, says MTN’s Nigerian unit improperly issued preference shares to the Johannesburg-based company, and must therefore repay the dividends it distributed. Four banks also face fines for helping to move money out of Nigeria. Though MTN denied wrongdoing, its shares plunged by more than 20 percent on Thursday morning, falling to their lowest level since 2009 and wiping roughly $3 billion off the company’s market value.

It’s unlikely that Africa’s biggest phone company will have to cough up the full amount. Though the 2015 fine was a clearer case, MTN managed to whittle the payment down to $1.7 billion, partly by promising to list its Nigerian unit on the Lagos stock exchange. That offering, scheduled for this year, is presumably back on ice. Last year, MTN also managed to convince Senate investigators in Abuja it had not illegally repatriated $14 billion in historical payouts.

The latest broadside probably lies in Nigeria’s murky politics and factional battle lines being drawn up ahead of next year’s presidential election. According to local media, President Muhammadu Buhari was furious that MTN managed to wriggle out of its full 2015 fine.

Even so, MTN can ill afford any disruption to cash payments from its Nigerian unit, which generated a third of the company’s total EBITDA in the six months to June. The central bank statement suggests it received an average of $1 billion a year from the business, home to 55 million of its 223 million subscribers, between 2007 and 2015. Compare that with the $630 million the group plans to pay out in dividends this year.

Three weeks ago, MTN told shareholders it hoped to boost dividends by between 10 and 20 percent a year. That now looks like a misdial.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at and follow us on Twitter @Breakingviews and at All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below