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MTN Denies Illegally Repatriating $8.1bn

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  • MTN Denies Illegally Repatriating $8.1bn

MTN Nigeria has denied its involvement in the alleged illegal repatriation of dividends worth $8.1bn between 2007 and 2015.

This came as the shares of MTN Group plunged by 25 per cent to a nine-year low on Thursday, a day after the Nigerian arm of the business was ordered to return the funds that the Central Bank of Nigeria said was illegally repatriated with the help of its bankers.

The telecoms company through its Public Relations Manager, Funso Aina, on Thursday, acknowledged the receipt of a letter from the CBN regarding the allegations on August 29, 2018.

The company said it only declared and paid dividends with the Certificates of Capital Importation issued by its bankers with the approval of the CBN.

“MTN Nigeria Communications Limited (MTN Nigeria) received a letter on August 29, 2018 from the CBN alleging that the CCIs issued in respect of the conversion of shareholders’ loans in MTN Nigeria to preference shares in 2007 had been improperly issued. As a consequence, they claimed the historic dividends repatriated by MTN Nigeria between 2007 and 2015 amounting to $8.1bn needed to be refunded to the CBN,” he said.

He added, “MTN Nigeria strongly refutes these allegations and claims. No dividends have been declared or paid by MTN Nigeria other than pursuant to the CCIs issued by our bankers and with the approval of the CBN as required by law.”

The company said the issues regarding the CCIs were object of investigation by the Senate in 2016, adding the findings by the Committee on Banking, Insurance and other Financial Institutions indicated that it did not contravene forex laws.

MTN Nigeria stated it regretted the re-emergence of the issue, saying, “It damages investors’ confidence and, by extension, inhibits the growth and development of the Nigerian economy.”

“In September 2016, the Senate mandated the Committee on Banking, Insurance and other Financial Institutions to carry out a holistic investigation on compliance with the Foreign Exchange (monitoring and miscellaneous) Act by MTN Nigeria & Others.

“In its report issued in November 2017, the findings evidenced that MTN Nigeria did not collude to contravene the foreign exchange laws and there were no negative recommendations made against MTN Nigeria,” the statement said.

According to the Aina, the company is committed to good governance and will abide by the extant laws of the Federal Republic of Nigeria.

The company promised to engage with the relevant authorities, vigorously defend its position on the matter and provide further information when available.

Meanwhile, Reuters reported on Thursday that the MTN shares closed down 19.41 per cent at 86.50 rand, after touching 80.61 rand, a level last seen in 2009.

The money is more than half of the MTN’s market capitalisation, and analysts said the demand risked further undermining Nigeria’s efforts to shake off an image as a risky frontier market for international investors.

The CBN also alleged that MTN used improperly issued certificates to convert shareholders loans in its Nigerian unit to preference shares in 2007.

As a result, dividends paid by MTN Nigeria to the parent company between 2007 and 2015 – amounting to $8.1 billion – were deemed illegal, and should be returned.

This sanction on the telecommunication company with the highest market share in Nigeria came two years after MTN agreed to pay more than $1bn for three years to end a dispute in Nigeria over unregistered SIM cards.

The company also agreed to list on the Nigerian Stock Exchange, which its executives said would be concluded by the end of the year if market conditions are appropriate.

Diamond Bank Plc, in a statement signed by the Company Secretary, Uzoma Uja, said it was in touch with the CBN to ensure amicable resolution of the issue and that it would not in any way affect its banking operation.

Uja said, “We note that these foreign exchange transactions occurred between 2001 and 2006 and currently, we are cooperating with the apex regulator to ensure that this matter is resolved.

“This development does not impact your ability to continue to do business with the bank. We want to assure all stakeholders that the bank complies with all regulatory policies issued. Updates on any new development will be made available to all stakeholders.”

Stanbic IBTC Holdings Plc also said in a statement that it had been informed by its banking subsidiary – Stanbic IBTC Bank Plc − that penalties had been imposed on it by the CBN, pursuant to a review of transactions relating to the remittance of foreign exchange on the basis of certain “irregular” capital importation certificates issued to MTN Nigeria.

It said the bank was holding further engagements with the CBN in relation to the issues raised.

The Group Company Secretary, Stanbic IBTC, Chidi Okezie, assured its customers “that the above does not impact on your ability to continue to conduct your various business and corporate transactions with Stanbic IBTC Holdings or any of its subsidiaries, including the bank.”

While the Standard Chartered Bank Nigeria said “we are unable to provide additional information at this time due to our ongoing engagement with the regulator; we look forward to a rapid resolution and satisfactory outcome to this matter,” the Citi Bank declined to say anything concerning the issue.

Speaking on the development, the Head, Department of Finance, Nasarawa State University, Prof. Uche Uwaleke, said beyond the fines imposed on the affected banks, it was necessary that the Economic and Financial Crimes Commission be involved to fish out those who compromised the system to perpetrate the use of fake Certificates of Capital Importation.

This, he noted, would help to provide credible evidence that would be used to prosecute individuals or firms that aided the banks to perpetrate the illegality.

He said, “By sanctioning the affected banks, the CBN has demonstrated that the country’s financial markets have laws which must be complied with by all participants. The scale of the infraction could not have been possible without collaborators both from within the deposit banks and the CBN.

“So, beyond the fines imposed on the banks, it is vital that the EFCC is involved to fish out the culprits with a view to prosecuting individuals or professional services firms that aided these banks to perpetrate the use of fake Certificates of Capital Importation, fraudulent conversion of investors’ loans to preference shares and rendering false returns to the CBN.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Banking Sector

COVID-19: CBN Extends Loan Repayment by Another One Year

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Central Bank Extends One-Year Moratorium by 12 Months

The Central Bank of Nigeria (CBN) has extended the repayment of its discounted interest rate on intervention facility by another one-year following the expiration of the first 12 months moratorium approved on March 1, 2020.

The apex bank stated in a circular titled ‘Re: Regulatory forbearance for the restructuring of credit facilities of other financial institutions impacted by COVID-19’ and released on Wednesday to all financial institutions.

In the circular signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, CBN, the apex bank said the role-over of the moratorium on the facilities would be considered on a case by case basis.

The circular read, “The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from nine per cent to five per cent per annum for one year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy.

“Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

“Following the expiration of the above timelines, the CBN hereby approves as follows:

“The extension by another 12 months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities.

“The role-over of the moratorium on the above facilities shall be considered on a case by case basis.”

It would be recalled that the apex bank reduced the interest rate on its intervention facility from nine percent to five percent and approved a 12-month moratorium in March 2020 to ease the negative impact of COVID-19 on businesses.

To further deepen economic recovery and stimulate growth, the apex bank has extended the one year-moratorium until February 28, 2022.

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Finance

MTN Nigeria Generates N1.35 Trillion in Revenue in 2020

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MTN Nigeria Grows Revenue by 15.1 Percent from N1.169 Trillion in 2019 to N1.35 Trillion in 2020

Despite the COVID-19 pandemic and challenging business environment, MTN Nigeria realised N1.346 trillion in revenue in the financial year ended December 31, 2020.

The leading telecommunications giant grew revenue by 15.1 percent from N1.169 trillion posted in the same period of 2019.

Operating profit surprisingly jumped by 8.5 percent from N393.225 billion in 2019 to N426.713 billion in 2020.

This, the telecom giant attributed to the surge in finance costs due to increased borrowings from N413 billion in 2019 to N521 billion in 2020.

MTN Nigeria further stated that the increase in finance costs was the reason for the decline in growth of profit before tax to 2.6 percent.

MTN Nigeria grew profit before tax by 2.6 percent to N298.874 billion, up from N291.277 billion filed in the corresponding period of 2019.

The company posted N205.214 billion profit for the year, a 0.9 percent increase from N203.283 billion recorded in the 2019 financial year.

Share capital remained unchanged at N407 million. While Total equity increased by 22.3 percent from N145.857 billion in 2019 to N178.386 billion in 2020.

MTN Nigeria’s market price per share increased by 61.8 percent from N105 to N169.90.

While market capitalisation as at year-end also expanded by 61.8 percent to N3.458 trillion, up from N2.137 trillion.

The number of shares issued and fully paid as at year-end stood at 20.354 million.

MTN Nigeria margins were affected by Naira devaluations and capital expenditure due to the new 4G network coverage roll-out.

Margins were adversely affected by the effect of naira devaluation and expenses associated with new sites’ roll-out to boost 4G network coverage in FY’20.

“On the former, we note that MTNN expanded the scope of its service agreement with IHS Holding Limited and changed the reference rate for converting USD tower expenses to NAFEX (vs CBN’s official rate previously). Thus, over the full-year period, the company’s operating margin contracted by 1.9 ppts YoY to 31.7%,” CardinalStone stated in its latest report.

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Finance

Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

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Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

Nestle Nigeria, a leading food and beverage company, has declared a final dividend of N35.50k per 50 kobo ordinary share for the year ended December 31, 2020.

The beverage company said N24.50k of the amount declared was from the after-tax profit of 2020 and N5 and N6 were from the after-tax retained earnings of the years ended December 2019 and 2018, respectively.

Nestle Nigeria stated that the amount declared is subject to appropriate withholding tax and approval at the Annual General Meeting of shareholders.

It also noted that payment will be made only to shareholders whose names appear in the Register of Members as at the close of business on 21 May 2021.

Dividends will be paid electronically to shareholders whose names appear on the Register of Members as at 21 May 2021, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts.

Shareholders who are yet to complete the e-dividend registration are advised to download the Registrar’s E-Dividend Mandate Activation Form, which is also available on their website: www.gtlregistrars.com, complete and submit to the Registrar or their respective Banks.

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