In the midst of negotiations over the payment of a record $5.2 billion fine
to the Nigerian government, MTN has managed to get its operational
license for Nigeria renewed and extended for an additional five years.
"With
this renewal and extension, MTN’s operating spectrum which was issued
along with the Digital Mobile License (DML) in 2001, has now been
extended to 31 August 2021,”Africa's largest mobile phone company, said in a statement. The extension will cost the company $94.2 million and the amount needs to be paid by Dec. 31 for the renewal to take effect.
MTN,
the leading mobile carrier in Nigeria, is in the midst of its worst
business stretch since it entered the country in 2001. The fine issued
last week was due to the company's failure to adhere to an edict by the
Nigerian Communications Commission (NCC) to disconnect users with
unregistered sim cards. The deadline to comply with the fine is Nov. 16.
The
company is also a subject of an insider trading investigation in South
Africa around trades made in the run-up to the announcement of the fine
to shareholders. The whole crisis has been immensely costly to MTN.
Since news of the fine became public, the company's shares have lost 22%
in value, according to Bloomberg. Or put another way, over the course of a week, the company lost over $5 billion in market cap.
The
decision by the regulator to renew MTN's operating license may be the
Nigerian government's way of calming down jittery foreign investors.
Ever since the fine's announcement, some analysts have suggested that
the decision could undermine investor confidence about Africa's largest
economy. "However way this ends, the lag effects will alter investors’
perceptions about the business environment in Nigeria," Manji Cheto,
vice president of Teneo Intelligence, told Quartz.
By
re-issuing MTN with a license, the Nigerian government may be saying to
prospective investors that, as long as you follow the law, you are
welcome to do business.
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