MTN sets aside N118bn for fine payment

The MTN Group is confident that the N780bn fine imposed on its Nigerian subsidiary by the Federal Government will be reduced and has earmarked $600m (N118.2bn at the official exchange rate of N197 to a dollar) for the total settlement.
The group’s earnings per share decreased by 51.4 per cent to 746 cents largely impacted by the Nigeria regulatory fine provision recorded, hyperinflation and losses incurred on its investments in AIH and MEIH and tower companies.
The firm had last week paid N50bn to the government and on Thursday expressed the hope of paying up the anticipated balance of N68.2bn before the end of this month.
While announcing the group’s results in South Africa on Thursday, MTN said that it might also reduce its 2016 dividend should more funds be needed to pay the fine.
“However, management applied its judgment in determining the provision,” it said in a statement.
The total provision accounts for only about 15 per cent of the total fine, which was imposed by the NCC after the telecoms company failed to cut off Subscriber Identification Module cards that were not properly registered.
Its Nigerian subsidiary said the provision was set aside in the group financial results, and was in accordance with the Principle of Prudence in generally accepted accounting standards.
“This requires that reasonable provisions be made for contingent liabilities,” the Public Relations and Protocol Manager, MTN Nigeria, Mr. Funso Aina, said in a statement, adding, “Discussions with the Nigerian authorities are still ongoing and stakeholders will be advised accordingly when a settlement is reached.”
The Corporate Executive, MTN Nigeria, Amina Oyagbola, said, “MTN’s auditors have required that the company make a provision in line with the International Financial Reporting Standards.”
The Executive Chairman, MTN Group, Mr. Phutuma Nhleko, also told Reuters on Thursday that the firm might list its Nigerian unit on the Nigerian Stock Exchange once it had resolved the fine issue with the Federal Government.
Nhleko said that the company was continuing settlement talks “in an attempt to ensure an amicable resolution in the interest of MTN Nigeria, its stakeholders and the Nigerian authorities.”
Commenting on the company’s financial statement in the country for 2015, the Chief Executive Officer, MTN Nigeria, Mr. Ferdi Moolman, said while weak economic conditions and heightened regulatory pressure impacted performance, “MTN continues to invest in Nigeria for the long term.”