THE VISIBLE HAND
TIM COHEN: Nigerian withdrawals from MTN threaten to close down this ‘ATM’ for good
The promised listing on the Nigerian exchange is most probably off for the time being, as are the plans to increase the dividend
The Nigerian government treats MTN like an ATM, so should MTN just close “the bank”, hand back its licence and leave? It’s a tempting thought, but obviously it’s more complicated than that. The consequences of the Nigerian government’s decision to slap new fines on MTN is really devastating for the company. In fact, two fines are involved: $8.1bn for allegedly shipping more dividends out of Nigeria than allowed and a further $2bn in notionally unpaid taxes. This comes on top of the $5bn claim for failing to cancel dormant accounts, eventually settled for around $1bn. It’s all very political, obviously, but what effect will this have on MTN’s Nigerian operation? The short answer is, huge. MTN Nigeria reported an after-tax profit of 32-billion naira for 2018 (about $90m). The fines, if imposed, will cancel out profits for the next 88 years. If that’s the case, what is the point of operating in Nigeria? And where do the Nigerian politicians get these bizarre numbers? Partly from quasi-...