MTN Drops as Phone Carrier Confronts New Allegations in Nigeria

LAGOS, Capital Markets in Africa: MTN Group Ltd. shares slumped the most in three months after Nigerian lawmakers raised new allegations about the wireless carrier, this time accusing the company of illegally moving almost $14 billion out of its largest market.

Nigeria’s Senate will thoroughly investigate the claim, it said on its Twitteraccount on Tuesday. The Johannesburg-based company, Africa’s biggest wireless carrier by sales, is accused of repatriating the funds over 10 years starting in 2006, according to Dino Melaye, the politician who made the motion. The four banks involved in the alleged illegal transfers are Citigroup Inc., Standard Chartered Plc, and Nigerian lenders Stanbic IBTC Holdings Plc and Diamond Bank Plc.

Representatives for MTN and two of the banks weren’t immediately available to comment. Citigroup and Johannesburg-based Standard Bank Group Ltd., which controls Stanbic, declined to comment.

MTN shares fell as much as 4.4 percent, what would be the biggest fall on a closing basis since June 27, and traded 3.4 percent lower at 119.77 rand as of 1:32 p.m. in Johannesburg. That values the company at 221 billion rand ($16.3 billion).

The accusation comes a little over three months after MTN agreed to pay a 330 billion naira ($1 billion) fine in cash to the Nigerian government and list its local unit on the country’s stock exchange after about eight months of negotiations. That penalty was levied for missing a deadline to disconnect 5.1 million customers unregistered in the country, which is battling an Islamic insurgency. The stock has fallen more than 37 percent since the fine was first reported in October, allowing crosstown rival Vodacom Group Ltd. to overtake the company in terms of market valuation.

“It’s not a good thing for MTN that there is a lot of noise being made again around corporate governance,” Sasha Naryshkine, an analyst at Johannesburg-based money manager Vestact Ltd., said by phone. “It’s difficult to move money out of the country illegally as it has to be moved through the central bank.”

MTN shares had fallen earlier on Tuesday after the Nigerian telecommunications regulator blocked the carrier’s attempt to take over internet spectrum owned by closely held Visafone, which it had agreed to buy in January. MTN is trying to add capacity to extend internet access in Nigeria and South Africa as revenue from voice services declines.

“It’s one mess after the other for MTN in Nigeria again today,” Naryshkine said.  

Source: Bloomberg Business News