As the conversation continues about the CBN order requiring MTN to repatriate $8.1 billion to Nigeria as well as the sanctions imposed on 4 banks, CSL Stockbrokers has shared an opinion- describing the development as yet another regulatory quagmire.
The stockbroking firm made this known in a series of tweets shared on its official Twitter handle, yesterday.
Meanwhile, the firm also made it clear that the N5.9 billion fine by the Central Bank of Nigeria will largely be immaterial; at least for their clients Diamond Bank and Stanbic IBTC. This is because “this amount is not large enough to pose as a threat to their financial stability and/or near-term profitability”, the firm said.
Nigeria | Telecoms
MTN in yet another regulatory quagmireThe impact of the N5.9bn (US$16.4m) regulatory fine imposed by the Central Bank of Nigeria (CBN) will not be material, at least for the banks under our coverage (Stanbic IBTC and Diamond Bank). @Nairametrics @proshare …
— CSL Stockbrokers Ltd (@CSLStockbroking) August 31, 2018
However, CSL noted in the statement that MTN’s latest troubles could still rob off negatively as some banks “some banks have shareholdings in the company.”
In our view, this amount is not large enough to pose as a threat to their financial stability and/or near-term profitability.We however note that most of the banks under our coverage(Access Bank, Diamond Bank, Fidelity Bank, FBN Holdings,FCMB, GTB, StabicIBTC, UBA, and Zenith)…
— CSL Stockbrokers Ltd (@CSLStockbroking) August 31, 2018
https://twitter.com/CSLStockbroking/status/1035469886137487360
Refunding $8.1 billion may not be possible
CLS Stockbrokers opined that it will be impossible for the telco to do that, seeing as “the funds have long been distributed to shareholders and lenders over time, and cannot be practically raised by MTN itself without major disruptions to its business.”
The apex bank may eventually resort to imposing fines on the telco. This will, in turn, ultimately affect the company’s profitability, CSL said.
We believe the regulator may resort to imposing a fine on MTN (which will materially impact profitability), or restrict future repatriation of funds by MTN, with the attendant effect on its foreign lenders and shareholders.
— CSL Stockbrokers Ltd (@CSLStockbroking) August 31, 2018
MTN’s much-anticipated IPO could be affected by this
The statement by CSL Stockbrokers also considered the likelihood of the company’s highly anticipated initial public offering being by this development. After months of speculations and delays, the NCC recently gave the telco May 2019 as the ultimatum to list on the Nigerian bourse.
Of particular concern, the CBN's refund directive given to MTN could potentially impact its Initial Public Offering (IPO) in Nigeria – which was expected to have commenced this month – and heightens the risk of an IPO undersubscription.
— CSL Stockbrokers Ltd (@CSLStockbroking) August 31, 2018
In the meantime, the telecoms giant has continued to take direct heats due to the latest pronouncements by the Central Bank of Nigeria. As we reported, the company’s shares declined sharply by 18% on Thursday morning due to the latest controversy it is embroiled in. It went on to decline as much as 31%; the worse performance in nearly ten years.
