MTN shop, Morningside, Sandton. Picture: ROBERT TSHABALALA
MTN shop, Morningside, Sandton. Picture: ROBERT TSHABALALA

Lagos/Johannesburg — MTN may receive a naira-denominated refund if Africa’s biggest wireless carrier returns the $8.1bn that Nigeria says was illegally taken out of the country.

The South African cellphone company must bring back the cash after it and three banks "flagrantly violated foreign-exchange violations", Nigeria Central Bank deputy governor Joseph Nnanna said by text message on Sunday, reiterating a Wednesday order. The lenders have been hit with a combined $16m fine for their role in the transactions, which happened over eight years to the end of 2015.

News of a potential like-for-like naira refund answers one of the outstanding questions arising from last week’s bombshell, when the reserve bank handed down the order to the country’s biggest mobile-phone company. How and when MTN should pay the money and what happens if the company does not comply remain unanswered. MTN refutes all allegations.

MTN’s share price ended the week 17% lower in the wake of the turmoil, leaving the stock close to nine-month lows. The news came almost three years after Nigeria hit the carrier with a $5.2bn fine — later reduced to about $1bn — in an entirely separate dispute over SIM-card registration. That incident also weighed heavily on the share price.

MTN had agreed to sell shares in the Nigeria business in Lagos as part of the 2016 SIM-card settlement, but the latest censure has thrown those plans in jeopardy.

The crackdown on the company comes as Nigerian President Muhammadu Buhari seeks re-election for a new four-year term in a February vote. His administration has gone after companies for irregularities as well as tax-defaulters, part of a wider pledge to fight corruption in Africa’s most populous nation.

Bloomberg reported on Friday that MTN’s plan to sell shares in its Nigerian unit in 2018 is in jeopardy following allegations by the central bank, according to people familiar with the matter.

While the listing process is far advanced there needs to be regulatory certainty for it to go ahead, said the people, who asked not to be identified as the information is private. That evaporated when Africa’s largest wireless carrier’s four banks were ordered late on Wednesday to return the funds, causing MTN’s share price to plunge to nine-year lows.

"Our IPO [initial public offering] has always been subject to satisfactory market conditions and this event will potentially make it complicated for us to make it happen," MTN spokesperson Mimi Kalinda said in e-mailed comments on Friday.

The four banks involved in the alleged illegal transfers over an eight-year period are Citigroup, Standard Chartered and Nigeria’s Stanbic IBTC Holdings and Diamond Bank. In July, MTN appointed units of Citigroup and Standard Bank to advise on the Lagos listing.