MTN agrees to pay Nigeria $1.7bn

MTN Group has agreed to pay 330 billion naira (about 24 billion rand), approximately 1.7 billion dollars as a fine to the Nigerian government; one-third of the original penalty, clearing the way for the carrier to continue operations in its largest market.

Africa’s biggest mobile-phone company will also “take immediate steps” to list shares of its Nigeria unit on the country’s stock exchange, Johannesburg-based MTN said in a statement on Friday. The fine will be paid over three years.

The agreement ends eight months of negotiations with Nigerian officials over how to settle the fine, which was levied for being slow to disconnect customers unregistered in the country.

Chairperson Phuthuma Nhleko came out of retirement to oversee the process, hiring former US Attorney General Eric Holder to lead negotiations.

The deal “is the best outcome for the company,” Nhleko said in the statement. “The relationship between MTN, the Nigerian government and the Nigerian Communications Commission has been restored and strengthened.”

Shares soar

MTN rose as much as 21% on the Johannesburg Stock Exchange (JSE) following the announcement. It traded 16% higher at R143.50 as of 13:21, on track for the biggest gain since 2008.

MTN’s battle with Nigerian authorities over payment of the fine had cost the company its status as Africa’s highest valued telecommunications operator, lowering the stock price by one-third amid a lack of clarity about the negotiations. The government originally issued a $5.2bn (R78.22bn) penalty and later lowered it to $3.9bn (R58.67bn).

MTN was slammed with the penalty after failing to comply on time with an order to disconnect 5.1 million customers deemed by the regulator to be unregistered in Africa’s most populous country.

MTN engaged Holder, a partner at law firm Covington & Burling, to challenge the penalty. Holder, the US Attorney General from 2009 to 2015, now advises clients on litigation matters.

Casualty

Sifiso Dabengwa resigned as CEO of MTN in November 2015 to take responsibility for the dispute, citing what he called ‘the most unfortunate prevailing circumstances occurring at MTN Nigeria’

MTN spokesman Chris Maroleng said at the time that Dabengwa’s resignation was no admittance of any wrong doing but was an “honorable gesture.”

On the choice of former CEO Phuthuma Nhleko as replacement, Maroleng said; “The gravity of current events in Nigeria required MTN to act swiftly and the board felt that Phuthuma Nhleko had the necessary experience especially in Nigeria.”

MTN expanded into markets such as Iraq and Syria under Nhleko.

Nigeria accounts for over 62 million subscribers of the telecoms giant’s 230 million customers in 22 countries.

Bloom/Ekata