The decision of the Attorney General of the Federation (AGF) and Minister of Justice to drop its $2 billion tax claim against MTN Nigeria has affected the company’s shares at the stock market.
Impact on MTN stock: The stocks of MTN Group was positively impacted as it jumped to close 5.3% higher in Johannesburg on Friday, Bloomberg reported.
MTN shares traded at 83.67 rand at the close on Friday, valuing the company at 158 billion rand ($11.1 billion). The case had been a drag on the shares’ movement of the telecommunications company for months.
The decision “paves the way to an orderly and amicable resolution of this matter,” MTN Chief Executive Officer Rob Shuter said in a statement.
He said, “MTN remains fully committed to meeting our fiscal responsibilities and contributing to the social and economic development of Nigeria and all regions where we operate.”
Nairametrics had reported that MTN Nigeria was set to begin the process of withdrawing its case against the office of the Attorney General of the Federation (AGF) and Minister of Justice. This came after the latter dropped the demand for the sum of N242 billion and $1.2 billion from the telecommunications company.
The claim by the AGF was one of the many governments and regulator challenges MTN faced prior to its listing in Nigeria and after its IPO in its biggest market in Africa. MTN has 52.1 million subscribers in Nigeria.
Nigeria shares not affected: The decision of the AGF, however, didn’t affect MTN’s shares in its biggest market, Nigeria. Despite the positive impact on its South African shares, the company’s share price in Nigeria remained flat, recording no movement.
The share price on the Nigerian Stock Exchange (NSE) a day before the AGF’s decision (last Thursday) closed at N116 and after the market closed on Friday, the stock remained at N116. This is despite the share price rising from N109.50 kobo last Wednesday to close at N116 on Thursday.
What this means: The report of the AGF’s decision to drop its claim against MTN might has boosted investors’ confidence in South Africa but investors in the country where the decision was made were not that inspired or motivated.
The lack of movement on MTN’s share price in Nigeria might be because the AGF only abandoned its claim, while the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS) are expected to take over and engage the company. So, the issue, which is a major concern to investors, is still hanging over MTN.