Forex losses in Nigeria sends MTN shares in a nose dive

MTN Group has revised its estimate of unrealised foreign exchange losses in Nigeria, and said it’ll appeal a new tax demand by the authorities in the West African nation.

The company’s Nigerian unit recognised additional unrealised foreign exchange losses on outstanding matured trade obligations and increased net finance costs for the six months to June, after incorrectly measuring them before, it said in a statement on Monday.

That means MTN Group’s earnings per share for the first half were also restated and are now 13% lower than the Johannesburg-based company reported previously.

Shares in MTN, Africa’s biggest wireless carrier, fell as much as 3% and traded 2.7% lower by 11.39am in Johannesburg.

Nigeria is MTN’s biggest market by subscribers and the Lagos-listed unit MTN Nigeria Communications contributes more than a third of the group’s total revenue.

The company will also challenge an order by the Nigerian Tax Tribunal to pay US$47.8-million in taxes. The evaluation pertains to a VAT assessment for the periods covering 2007 and 2010-2017, it said.

“Having reviewed this outcome and considering input from tax and legal consultants, MTN Nigeria has resolved to appeal the decision,” the company said.

African phone companies have been pushing back on sporadic tax demands from countries and regulators on the continent. Last week, six telecommunications CEOs — including MTN Group’s Ralph Mupita and Vodacom Group’s Shameel Joosub — urged African leaders and policymakers to “rationalise” taxation on the mobile industry through the development of targeted fiscal policy reforms, according to an agreement signed in Rwanda.

MTN has a history of impasses with Nigerian authorities and was victorious in a dispute in the West African nation in 2020, when the government dropped a $2-billion claim for back taxes. More recently, Ghana had to abandon a $773-million back-tax bill against MTN that the company disputed.