MTN meets with bad regulators, US sanctions against Iran and civil wars


faEW FIRMY better to know the promise and pitfalls of doing business in Africa MTN, telecommunications giant. Combining his first conversations in 1994, the year in which Nelson Mandela came to power, the company became the symbol of the new South Africa and an early vehicle for black investments. At that time, there were only 6 million landline phones in sub-Saharan Africa, one for every 100 people. Today MTN Sam has 225 million mobile subscribers in 21 countries in Africa and the Middle East. Former chairman, Cyril Ramaphosa, is now the president of South Africa.

One reason MTNDynamic development is focused on emerging markets, where young, fast-growing populations are eager to establish contacts. But it can be hard to work in such places. The risk is related to the territory, says Rob Shuter, MTNA phlegmatic boss. "There will be good patches and bad spots." Speaking gently: his current headaches include Nigerian regulators demanding billions of dollars, sanctions against Iran and some civil wars.

The biggest worry is Nigeria, which has 27% MTNIncome. In August, the central bank ordered the Group to return USD 8.1 billion, which was, as it was written, exported illegally from the country. Then the attorney weighed, chasing $ 2 billion. Reverse tax (two totals add up to roughly MTNMarket value). A double whammy hit the third MTNShare price per week on the Johannesburg stock exchange. South Africa has recently informed the central bank about the risks to the financial system if MTN they were soon forced to pay.

This is unlikely. MTN filed a lawsuit in Nigeria to challenge claims that pertain to transactions dating back to a decade. The governor of the Nigerian central bank said he expected a reduction in the amount. As Economist he went to the press, reports spread over $ 8.1 billion. It's in the interest of both sides to find a solution, says David Ferguson of Renaissance Capital, since then MTN is one of only two companies in Nigeria with resources for large investments in telecommunications infrastructure (the other is Airtel, a local company).

There is a precedent for a compromise. In 2015, the Nigerian regulator fined MTN 1 trn naira (then worth $ 5.2 billion) for non-inclusion of unregistered SIM cards: some of them, they claimed, were used by Boko Haram, a brutal group of Islamists. The amount has been reduced to 330 billion Naira. Under the agreement MTN he promised to exchange his local unit on the Nigeria stock exchange. The planned traffic for this year may be delayed.

Spat also hurt Nigeria's reputation. The political landscape is "difficult to navigate with all these faces," says Bright Khumalo of Vestact, a South African asset manager who MTN Actions. The case is symbolic because MTN is one of the few South African companies that have been successful in Nigeria. Many other people, including the hotel group, retailer and food producer, have retired in recent years.

But MTN he learned to live with an unexpected. After Nigeria, its second largest subscriber base is in Iran, which it entered in 2006. It has 49% of shares MTN Irancell, a joint venture with a consortium affiliated with the Iranian government. Renewed US sanctions can keep cash in the country: by the end of September MTNThe outstanding balance totaled € 143 million ($ 161 million). In the cash flow projections, the Group assumes that it will not be able to obtain any funds for the next three years.

Elsewhere MTN he is struggling with unstable economy and hyperinflation. It operates in war zones in Syria, Afghanistan, Yemen and South Sudan (these countries contributed less than 5% of income in the first half of the year). In Uganda, the data center has recently been attacked by government spies.

A review of the place where the company is running is underway. He has already sold a small unit in Cyprus; small units of West Africa, in places like Liberia, could go further. But changes mean consolidation, not retreat. The group is looking at new markets in Angola and perhaps in Ethiopia, where the state pre-relaxes control over the telecommunications sector. He hopes for a rapid increase in demand: in all of Africa until 2025. An increase of 440 million smartphones is expected. There are many pitfalls, but the promise remains.


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