MTN shares rise after new chief to start three months early

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A customer leaves an MTN shop in Johannesburg April 10, 2012. REUTERS/Siphiwe Sibeko
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By Tiisetso Motsoeneng and Camillus Eboh

JOHANNESBURG/ABUJA (Reuters) – MTN Group’s next chief executive will take over three months early, the South African telecoms company said on Monday, boosting a share price hit by allegations it illegally moved $14 billion out of Nigeria.

Rob Shuter, European boss of Vodafone, was due to start at MTN in July but will now start on March 13 and have to tackle the latest problem to face the company in its most lucrative but increasingly problematic market.

MTN agreed to pay a fine of 330 billion naira ($1.1 billion), reduced from $5.2 billion after a prolonged legal battle, in June to end a dispute in Nigeria over unregistered SIM cards.

The fine prompted the departure in November 2015 of former CEO Sifiso Dabengwa.

MTN gave no reason for Shuter’s early move and did not say if it had reached any agreement with Vodafone to facilitate it.

Shuter, a South African-born banker with a background in risk management, will join a company widely seen in South African business circles as a post-apartheid corporate success story. Yet MTN has attracted controversy over its ventures in some frontier markets, such as a decision a decade ago to enter Afghanistan, Syria and Iran.

Now the firm is the subject of a parliamentary investigation in Nigeria on whether it unlawfully repatriated $13.9 billion between 2006 and 2016, allegations which MTN denies. MTN runs the largest wireless phone network in Nigeria, where it generates a third of group sales.

“It wasn’t spectacular that the CEO is going to join three months sooner, but the share price has fallen so much that some kind of good news would cause this kind of a recovery,” said Wayne McCurrie, a fund manager at Ashburton Investments.

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MTN, which also reported a slight fall in user numbers on Monday, said it would strongly defend itself against the Nigerian investigation. Its shares, which had fallen on Friday to their lowest in more than six years, were up 3.1 percent at 110.31 rand by 1409 GMT.

FOREIGN CURRENCY

The crux of the latest Nigerian allegations is that MTN did not obtain certificates declaring it had invested foreign currency in Nigeria within a 24-hour deadline stipulated in a 1995 law, and therefore the repatriation of returns on those investments was deemed illegal.

A motion proposed by Nigerian Senator Dino Melaye alleged that banks that include Citigroup subsequently issued certificates of capital importation so MTN could repatriate the hard currency.

Citigroup’s Nigeria unit denied being involved in any unlawful transfer of foreign currency on behalf of MTN or any other customer, in a copy of a presentation to the Nigerian parliament last week.

It is unclear what penalty Nigeria would impose if MTN is found guilty of any wrongdoing in the investigation, which began last week and is expected to run for two weeks.

A senate source told Reuters that if MTN were to be found guilty, the company and individuals involved would face criminal prosecution for false declaration.

MTN said the Nigerian central bank had instructed the company to halt dividend payouts until further notice, although it has not been paying dividends on its earnings in Nigeria due to the fine for missing the deadline on SIM card registrations.

(Additional reporting by Chijioke Ohuocha in Lagos; Editing by David Holmes and Alexander Smith)

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