Nigeria’s Attorney General, Abubakar Malami has withdrawn a $2 billion tax demand against South African telecoms giant MTN Group, ending a 16-month long battle between Africa’s largest wireless carrier and legal authorities in Nigeria.
In a letter filed with the Nigerian Stock Exchange, MTN said the government had decided to drop its case and refer the issue to tax and customs authorities “with a view to resolving contentious issues.”
MTN Nigeria’s Chief Executive Ferdi Moolman said in a statement that “MTN is very pleased with the decision of the attorney general” and further commended him for his “wisdom.”
Prior to this, Malami had ruled that the firm owed taxes relating to the import of equipment and payments to foreign suppliers from 2007 to 2017. The telecoms company, which disputed the claim from the start, had struggled to convince investors it could get the tax demand cancelled.
However, with the latest development which paves the way to an orderly and amicable resolution of the matter, the company shares rose 5.3 percent higher in Johannesburg, its biggest jump since March 2019. In Nigeria, shares rose by 10% to 127.60 Naira each, helping lift the broader market index by 1.6% on Monday making it the highest in two weeks.
The company’s stock is on the road to recovery from the news of a massive $5 billion fine more than four years ago, which was later reduced to about $1 billion, for missing a deadline to cut off unregistered subscribers during a security crackdown. Last year, it also agreed to pay a separate $53 million fine after being accused of illegally repatriating $8.13 billion to South Africa.
MTN began operation in Nigeria in 2001 and is the country’s largest operator with over 60 million subscribers. The country remains MTN’s most profitable market, and the company continues to invest in high-speed internet services and online banking to gain more value from customers. The company’s local unit, MTN Nigeria Communications Plc, listed in Lagos last year as the second-largest company on the city’s stock exchange.
It is imperative to note that the case between Nigeria and MTN was a closely watched case. Critics, however, claimed that the dispute is damaging to Nigeria’s appeal to foreign investors. MTN Group’s shares traded at 83.67 rand at the close on Friday, valuing the company at 158 billion rand ($11.1 billion).
By Faith Ikade
