Lagos, Nigeria. Picture: AFP/PIUS UTOMI EKPEI
Lagos, Nigeria. Picture: AFP/PIUS UTOMI EKPEI

Shares in Africa’s largest mobile operator MTN, rose as much 5% in late afternoon trade on Friday as the operator announced that Nigerian authorities had withdrawn a $2bn (R28.54bn) tax demand.

The company said the attorney-general of Nigeria withdrew the tax against MTN Nigeria and referred the matter to tax authorities.

“We appreciate this decision of the attorney-general, which paves the way to an orderly and amicable resolution of this matter. MTN remains fully committed to meeting our fiscal responsibilities and contributing to the social and economic development of Nigeria and all regions in which we operate,” MTN group CEO Rob Shuter said in a statement.

In May last year, MTN won a small victory when the federal high court in Nigeria ruled that the network operator met a deadline to respond to the demand from Nigeria’s attorney-general despite state lawyers saying that the company had failed to do so.  

The attorney-general slapped MTN with the bill for backdated taxes in September 2018 but the company argued that the claim was without merit and was outside the authority’s jurisdiction.

On Friday, MTN said its Nigerian operation was informed by its legal counsel that the attorney-general had decided to refer the matter to the relevant authorities, being the Nigerian Federal Inland Revenue Service and Nigeria Customs, with a view to them resolving the issues.

The company, valued at R157.26bn, said it will follow the necessary process to withdraw its legal action against the attorney-general and engage with Nigerian tax agency and customs on the issue.

With about 240-million subscribers in 21 markets globally, MTN operates in a number of conflict areas, including Yemen, Syria and Afghanistan. Of these markets, Nigeria has caused the most headaches for MTN.

In recent years, legal battles have raged with that country’s government over the alleged tax infringement. In December 2018 the company resolved an $8.1bn fine related to repatriated dividends. In a separate matter MTN negotiated down a $5bn fine related to unregistered SIM cards.

While the company reached a settlement with Nigeria’s central bank in late December 2018 — the dividends claim was reduced to $53m — the tax case has remained an overhang on its share price.

Last week, it emerged that MTN was facing a 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 anti-terrorism laws, saying the company paid “protection money” to the Taliban to secure its own infrastructure.

gavazam@businesslive.co.za