MTN Group has agreed to pay a reduced fine of 330 billion naira ($1.67 billion) in a settlement with the Nigerian government over unregistered SIM cards, sending shares in the South African telecoms provider soaring. The settlement clears the way for MTN to list its local unit on the Nigerian Stock Exchange as soon as "commercially and legally possible", MTN said.
The fine will be paid over three years and is only around a third of the $5.2 billion figure initially demanded by Nigeria last October for failing to deactivate more than five million unregistered SIM cards on MTN's network. Nigeria had been pushing operators to verify the identity of their subscribers, concerned that unregistered SIM cards were being used for criminal activity in a country fighting an insurgency by Islamist militant group Boko Haram.
Shares in MTN surged more than 20 percent at one point and traded 11.7 percent higher at 138.14 rand at 1335 GMT. They have shed 22 percent since the fine was first announced. "The relationship between MTN, the Federal Government of Nigeria and the Nigerian Communication Commission (NCC) has been restored and strengthened," MTN Executive Chairman Phuthuma Nhleko said. The Nigerian regulator said on Friday that the settlement was acceptable to both parties and that it had not been "out to kill MTN". "Money was not the issue here. The breach was the issue. I believe MTN has learned its lesson," NCC spokesman Tony Ojobo told Reuters.
Nhleko, who was MTN chief executive for nine years until 2011, was appointed on an interim basis for six months in November but has stayed an extra two months as the company negotiated with Nigerian authorities. In February, MTN hired Eric Holder, the former US attorney-general, to help negotiate the fine. MTN is the largest mobile phone operator in Nigeria with 62 million subscribers and the west African nation accounts for about one third of its revenues.
MTN, which is Africa's largest telecoms company, has already paid 50 billion of the 330 billion naira owed. The rest will be paid in six instalments over three years, the company said in a statement. Five weeks after the fine was first announced, MTN's chief executive Sifiso Dabengwa resigned and the company asked its former head Nhleko to take the reins temporarily.
A Johannesburg-based analyst gave Nhleko credit for not settling the fine earlier at a figure of $3.9 billion, the first sign Nigerian authorities gave after months of talks that it was willing to accept a lower sum. "He's the guy who built this ship and this shows he can still steer the ship," Momentum SP Reid Securities analyst Sibonginkosi Nyanga told Reuters.
The telecommunications firm which spans 20 countries, set aside $600 million in March to pay the fine in Nigeria, its largest market. Nigeria, Africa's largest economy and most populous nations, faces its worst crisis for decades after the sharp fall in oil prices and last year's introduction of a currency peg that put investors to flight.