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Thursday, 20th September 2018
2:34:01pm

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South African telecoms firm MTN Group said on Monday it was confident a multi-billion dollar dispute with the Nigerian government would be resolved even as it applied for a court injunction to protect its Nigerian assets.

Nigeria’s central bank last month ordered MTN’s Lagos-based unit to hand over $8.1 billion that it said was illegally sent abroad, and the government earlier this month handed MTN with a $2 billion tax bill.

Some industry analysts see Nigerian politics as a factor in the pressure on MTN. President Muhammadu Buhari, who swept to power in 2015 on promises to fight corruption and push through tougher regulation, is seeking re-election in next year’s polls.

“Nigeria, it’s our largest market. We’ve been operating there since 2001,” MTN Chief Executive Rob Shuter told reporters at the ITU Telecom World conference in Durban. “We do have some challenges these past few weeks, but we believe we will be able to make our case and I’m sure we will move past that as soon as we can.”

Nigeria’s main allegation against MTN is that it used improperly issued certificates to convert shareholder loans in its Nigerian unit to preference shares in 2007. As a result, $8.1 billion in dividends paid by MTN Nigeria to its parent between 2007 and 2015 should be returned, the central bank said.

Separately, Nigeria’s Attorney General says MTN Nigeria should have paid approximately $2 billion in taxes relating to imports of foreign equipment and payments to foreign suppliers.

MTN’s latest troubles come about two years after it agreed to pay more than $1 billion to settle a dispute over SIM cards in Nigeria, whose finances have been hit by a weak economy and volatile global oil prices.

MTN, which has expanded in more than 20 frontier markets including war-ravaged Syria and Afghanistan, denies wrongdoing in Nigeria, which accounts for a third of its annual core profit.

On Monday, it said in a statement that it had applied in Nigeria’s Federal High Court for an injunction to restrain the central bank and Attorney General from taking further action while it engages Nigerian authorities.

“We remain resolute that MTN Nigeria has not committed any offences and will continue to vigorously defend its position,” the statement read.

Shuter, who has led MTN since last year, said on Monday that regulatory environments elsewhere in Africa and the Middle East were largely aligned with what MTN wanted to achieve.

MTN’s shares were slightly firm on Monday, trading up 0.4 percent at 1310 GMT.

-Reuters

MTN Group faces a $2 billion demand for taxes in Nigeria, the latest in a series of skirmishes with authorities in the South African mobile phone company’s most lucrative but increasingly problematic market.

The announcement of the tax bill incurred over the last decade comes days after the west African country’s central bank ordered MTN’s Lagos-based unit to hand over $8.1 billion that it said was illegally sent abroad.

Mobile operator MTN disclosed it had been in talks with Nigeria’s Attorney General about an investigation into tax compliance in a statement outlining the background to the case of the money sent out of the country.

“In this process, his (the Attorney General’s) office made a high-level calculation that MTN Nigeria should have paid approximately $2.0 billion in taxes relating to the importation of foreign equipment and payments to foreign suppliers over the last 10 years,” MTN said.

MTN, whose Nigerian business brings in a third of its annual core profit, or EBITDA, said its total payment of around $700 million over the 10-year period fully settled the amount owing under the taxes in question.

The latest demands come two years after MTN, Africa’s biggest telecoms company, agreed to pay more than $1 billion to end a dispute with Nigeria over unregistered SIM cards.

Shares in MTN dropped 5.6 percent to 81.95 rand as of 1250 GMT, bringing losses since last Thursday, when the central bank issued the $8.1 billion demand, to nearly 25 percent.

“These are old issues that have been investigated and closed but now they are being reopened,” said Byron Lotter, a portfolio manager at Vestact in Johannesburg.

“I’m not surprised that a lot of people are selling and saying ‘these guys are just too volatile, I’m out’. I wonder if MTN are thinking the same.”

PULLING OUT

South African hotels and casino group Sun International said it was in final stages of exiting Nigeria following clashes with regulators and shareholders.

It is following in the footsteps of retailer Woolworths and foodmaker Tiger Brands, both of which quit Nigeria over the last three years.

MTN, which has expanded in more than 20 frontier markets that include war-ravaged Syria and Afghanistan, called the latest demands by Nigerian authorities “regrettable and disconcerting”.

“MTN Nigeria will continue to engage with the relevant authorities on all these matters, and we remain resolute that MTN Nigeria has not committed any offences and will vigorously defend its position,” the company said.

Nigeria’s attorney general, Abubakar Malami, declined to comment, referring Reuters to a spokeswoman at the ministry of justice. She could not immediately be reached by phone.

MTN’s regulatory troubles in the oil-rich country come ahead of next year’s presidential election, in which Nigerian President Muhammadu Buhari, who swept to power on promises of tougher regulations and a stronger fight against corruption in a 2015 election, is seeking re-election.

But analysts say Nigeria’s demands against MTN risk further undermining its efforts to shake off an image as a risky frontier market for investors.

-Reuters 

South Africa has cancelled plans to add 9,600 megawatts (MW) of nuclear power by 2030 and will instead aim to add more capacity in natural gas, wind and other energy sources, the energy minister announced on Monday.

Africa’s only nuclear power has an installed capacity of 1,860 MW but plans under the government of former President Jacob Zuma to have six times that output by 2030 hit hurdles over cost and other issues.

There are now “no plans to increase nuclear until 2030,” Energy Minister Jeff Radebe said while releasing the government’s new Integrated Resource Plan (IRP).

The plan also showed that electricity demand on the grid has been declining.

Russian state-owned firm Rosatom was seen as a frontrunner to build the additional nuclear capacity.

Several meetings between Zuma and Russian President Vladimir Putin led to speculation that Rosatom had secured the deal before the launch of the public tender. South Africa’s government and Rosatom denied this claim.

But soon after taking over from Zuma in February, President Cyril Ramaphosa put the nuclear expansion on the back burner saying the plan was too expensive.

In July, Ramaphosa said Putin had raised the subject of a nuclear deal at a private meeting with him at the BRICS summit in Johannesburg but that he had told him that Pretoria could not sign such a deal for now.

Radebe on Monday instead outlined expansion plans targeting other energy sources.

He said the plan calls for additional capacity of 8,100 MW from wind and 8,100 MW from gas, 5,670 MW from photovoltaic panels, 2,500 MW from hydro and 1,000 MW from coal by 2030.

Public comment on the plan is invited for 60 days before final cabinet approval, he said.

-Reuters

Workers from South Africa’s mainly-white Solidarity union staged a go-slow protest at the petrochemicals firm Sasol on Monday over a share scheme offered exclusively to black staff, and said they would begin a full strike on Thursday.

South African companies are required to meet quotas on black ownership, employment and procurement as part of a drive to reverse decades of exclusion under apartheid. Meeting the rules makes a company more likely to qualify for government tenders.

Solidarity has been waging a challenge against racial quotas in the workplace, and lodged a complaint against the policy in 2016 with the U.N. Human Rights Commission.

Sasol, the world leader in technology that converts coal and gas to fuel, has sold 25 percent of its local operations to qualifying black employees, a foundation and the black public in a 21 billion rand ($1.5 billion) deal financed by the company.

It has said the scheme is not a benefit but a mechanism designed to meet the rules on black economic empowerment, and was backed by shareholders.

But Solidarity said the scheme was discriminatory and that it would file a complaint to U.S. regulators. Sasol also operates in the United States.

The union said 6,300 of its members would hold a go-slow at Sasol’s facilities in South Africa, and then strike on Thursday.

“We are not against the scheme, we just want it to be inclusive of all workers. If the company makes it inclusive, the majority will still be black, so we see no need to exclude white workers as this is discrimination,” said Dirk Hermann, Solidarity’s chief executive.

Sasol, which employs around 26,000 people in South Africa, said it was aware of Solidarity’s intent to strike, and that it had made contingency plans.

SHARES SLIP

Sasol’s shares were 1.4 percent lower at 568.14 rand, with the market expecting the dispute to be resolved without affecting earnings.

A Sasol spokesman said parts of the flagship Secunda and Sasolberg plants, which produce fuel and chemicals respectively, were anyway undergoing scheduled maintenance shutdowns, but that both plants otherwise continued to operate.

The ruling African National Congress said in a statement that it was concerned by the “obsession with perpetuating racial polarization” triggered by Solidarity’s protest.

Solidarity’s Hermann said the union was not promoting racism and had backed schemes at AngloGold Ashanti and iron ore mining firm Kumba that treated white and black workers equally.

But it was in court challenging an empowerment scheme at the cement firm PPC that grants each black worker twice as many shares as a white worker.

Herman said Solidarity had also challenged a similar scheme at South Africa’s biggest mobile operator, Vodacom, but had been hampered by its low members’ roll at the firm.

The Commission for Conciliation, Mediation and Arbitration, which mediates in labour disputes, ruled that Solidarity did not have a legal right to challenge Sasol’s scheme in court, but could push its cause through industrial action.

 “We expect Sasol to come to the negotiating table,” Hermann said.

-Reuters

South Africa’s Shoprite reported a surprise 3.8 percent fall in annual earnings on Tuesday, citing a currency devaluation in Angola and lacklustre trading in other markets abroad.

Africa’s biggest grocery store chain reported diluted headline earnings per share (EPS) of 968.7 cents in the year ended July versus a 1,090 cents estimate in a poll of 10 analysts by Thomson Reuters’ I/B/E/S.

Analysts had expected an increase of 8.2 percent.

Headline EPS, the most widely watched profit gauge in South Africa, strips out certain one-off items.

Sales of the Cape Town-based company rose 3.1 percent to 145.3 billion rand ($9.9 billion).

Shoprite, which trades in 14 countries in the rest of Africa and Indian Ocean islands, said its local division reported turnover growth of 5.7 percent, while its non-South Africa operations recorded a decline in sales of 7 percent.

The company said its Angolan business was hit by a chronic shortage of foreign currency and a devaluation, adding that the Angolan Kwanza had lost 50 percent of its value against the U.S. dollar since December 2017.

It said other markets outside South Africa “continued to experience lacklustre trading conditions and foreign exchange fluctuations.”

-Reuters

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