Investors appear only a little perturbed by lawsuit against MTN
Losses in share price muted after allegations the cellphone company violated US antiterrorism laws in Afghanistan
The share price of cellphone giant MTN was only a little lower in response to the lawsuit brought by attorneys representing US service members and contractors killed in Afghanistan. They are seeking damages as a result of the company allegedly violating US antiterrorism laws.
MTN’s share price was just 0.5% weaker at the JSE’s open on Tuesday morning, at R83.15, after closing 0.74% lower on Monday when the news of the suit broke. By contrast, MTN’s nearest competitor, Vodacom, was virtually unchanged at R117.
The share price did, however, fall a little further later in the day, but so did those of its counterparts. By 11.21am, MTN was down 1.56% to R82.29, while Vodacom had fallen 1.67% to R115.19 and Telkom 1.48% to R34.71.
This is still a far cry from the share price reaction to news in August 2018 that it had been ordered by Nigerian authorities to return about $8bn (R112bn) they said it had moved out of the country illegally. On the day of that announcement, the share price plummeted more than 19%.
MTN said on Monday it was aware of the lawsuit, which was filed in the district court of Washington DC last week.
“MTN is reviewing the details of the report and is consulting its advisers but remains of the view that it conducts its business in a responsible and compliant manner in all its territories and so intends to defend its position where necessary,” said the company via Sens on Monday.
The lawsuit claims that MTN paid protection money to the Taliban in Afghanistan to prevent its network infrastructure from being targeted and destroyed. This financial support to the US-designated terrorist organisation, say the papers, was in part paid using money MTN borrowed from a subsidiary of the World Bank based in the US.
The lawsuit goes further to say MTN Afghanistan actively collaborated with the Taliban by agreeing to switch off its network at night at the request of the insurgents, to prevent US forces from tracking terrorists during capture-and-kill missions. This was also a move designed to avoid intelligence on insurgents from informants flowing to coalition forces.
The US invaded Afghanistan in the wake of the 9/11 attacks in 2001 and overthrew the Taliban government, which it accused of harbouring terrorists linked to the destruction of the World Trade Center.
The lawsuit is brought by more than 100 families of US soldiers killed by the Taliban and Al-Qaeda in Afghanistan. The papers include details of how each soldier was killed, including methods ranging from improvised explosive devices to suicide bombings and more conventional forms of ambush.