MTN’s profit projection unhindered by numerous regulatory troubles

MTN Group, the parent company of Nigeran Telecommunication firm, MTN Nigeria, has projected an increased profit despite the telecom company’s financial tussle with various African regulators.

The South African-based company announced it will surpass analyst projection which was curated based on MTN’s dispute with some African regulators which has resulted into sanctions, particularly with the Central Bank of Nigeria (CBN), Office of the Attorney General in Nigeria, and the Kogi State government.

MTN’s revenue is being probed by the Ugandan government over a report that the telecommunication giant is understating its revenues, but MTN denied the accusations, stating the company is compliant on all tax matters, and that revenues are independently audited.

MTN’s many woes in Nigeria

MTN vs CBN: The telco was alleged to have illegally transferred $8.1 billion out of the country with the help of four banks, including CitiBank, Diamond Bank, Standard Chartered Bank and Stanbic IBTC Bank.

Central Bank of Nigeria accused MTN of repatriating $8.1 billion using improperly issued Certificates of Capital Importation. Although, MTN and the affected banks all denied this claim, MTN later sought an out-of-court settlement with CBN.

MTN vs OAG: The Office of the Attorney General first claimed that MTN Nigeria was owing the sum of $2 billion in back taxes. The company was asked to pay the money immediately. Recall that Nairametrics reported exclusively that Nigeria’s Attorney General, Abubakar Malami, had made the demand after an investigation into corporate tax compliance in Nigeria revealed that MTN was owing $2 billion in back taxes.

MTN vs Kogi State: Meanwhile, Kogi State Government had shut down MTN’s facility over failure to pay tax obligations of N120 million to the state government. Barrister Jamil Isah, the Director, Legal Services and Enforcement of the Kogi State Revenue Service, said MTN had been uncooperative in meeting its tax obligations.

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In response to the shutdown, MTN Nigeria’s Corporate Relations Executive, Tobechukwu Okigbo, said the company has filed a lawsuit of N5 million damages against the State Government. MTN Nigeria insists the Kogi State Government doesn’t have the jurisdiction regarding regulating the telecommunications companies in Nigeria, arguing that the Federal Government had the sole authority.

NCC Fine: Four major telecommunications companies in Nigeria have been fined for various actions that contravene the rules and regulations of the Nigerian Communications Commission. The regulatory body of the telecoms sector fined MTN Nigeria, Airtel, Glo, and 9mobile. The total fine of all four telecoms was estimated at N74 million.

MTN’s profit projection

Despite its numerous issues in Nigeria which are currently undergoing settlement and in Court, MTN Group stated that the company expects an increased profit by as much as 90 per cent in its 2018 result.

According to a report, Analysts had predicted that the $8.1 billion repatriation demand dispute with the Central Bank of Nigeria would affect the fourth quarter earnings of the Nigerian unit. The MTN result is due for March 7, 2019.

Nigeria accounts for nearly a third of MTN’s core profit, but it has become increasingly problematic with its various regulators’ sanctions placed on the telecommunications company.

But Reuters reported MTN said on Thursday, that headline earnings per share, the primary measure of profit in South Africa, would likely come in a range of 328 cents to 346 cents for the year ended December. That compares with 182 cents a year earlier.

Nairametrics learnt even the upper end of the forecast is not even half what the company reported in 2015, a year before it agreed to pay a $1.7 billion fine over three years for missing a deadline to cut off unregistered SIM card users in Nigeria.

MTN Nigeria leads the telecoms industry with 43,899,957 million subscribers, Airtel comes second with 29,757,791 million subscribers in Nigeria, Globalcom accounts for 28,054,948 million subscribers, while 9mobile has 9,919,820 subscribers.

Source: Nairametrics

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