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.
Dangote, BUA Cement drag Nigerian Stock market down, investors lose N154.28 billion
Investors lost N154.28 billion in value, as market capitalization dropped to N13.04 trillion at the Nigerian Stock market.
Nigeria’s stock market finished the week on a poor note, extending its previous day’s loss. The ASI declined by -1.17% to 25,016.00 index points. Consequently, the Year to Date loss dipped to -6.88%. Also, investors lost N154.28 billion in value, as market capitalization dropped to N13.04 trillion.
In terms of activity levels, market activity mirrored the broad index as total volumes and values declined by -20.61% and -52.51% to 214.49 million units and 2.51 billion respectively. ZENITH BANK was the most traded stock by volume at 22.2 million units, while NB topped by value at N666 million.
Market sentiment, measured by market breadth, was however positive with 22 gainers led by BOCGAS (10.00%), against 18 losers topped by CABDURY (-9.47%).
Across the major indexes we cover, four out of five indexes closed negative. The Industrial goods (-3.91%) index was the worst performer, due to BUACEM (-5.44%) and DANGCEMENT (-2.04%) price decline. The Consumer Goods (-1.23%) and Energy (-0.96%) indices followed, owing to sell-offs in CADBURY (-9.47%); NB (-4.55%); GUINNESS (-3.68%) and OANDO (-2.22%).
Also, the Banking (-0.28%) index lost points, as prices of GUARANTY (-2.45%) and FBNH(-1.82%) fell. The Insurance index was the lone gainer, up +0.06% on price appreciation in CHIPLC, CUSTODIAN & AIICO Insurance.
BOCGAS up 10.00% to close at N4.4; SKYAVN up 9.64% to close at N2.73; NASCON up 1.77% to close at N11.5; CUSTODIAN up 3.42% to close at N6.05; and NEIMETH up 9.94% to close at N1.77.
CADBURY down 9.47% to close at N7.65; BUACEMENT down 5.44% to close at N40; NB down 4.55% to close at N42; GUINNESS down 3.68% to close at N18.3; and DANGCEM down 2.04% to close at N139.
Market dropped close to the N13 trillion market capitalization support level, as heavy selling was observed among blue-chip stocks. Nairametrics recommends caution as price swing momentum strengthens.
Buhari reappoints Danbatta as NCC Vice Chairman/CEO
With the reappointment, Danbatta will continue serving in the capacity of NCC Vice Chairman and CEO for another 5 years.
President Muhammadu Buhari has approved the reappointment of of Prof. Umar Garba Danbatta as Executive Vice Chairman, and Chief Executive Officer of the Nigerian Communications Commission (NCC).
This means that Danbatta will continue serving in the capacity of NCC Vice Chairman and CEO for another 5 years.
Personal assistant on New Media to President Muhammadu Buhari, Bashir Ahmad announced this via his twitter handle on Friday evening.
President @MBuhari has approved the reappointment of Prof. Umar Garba Danbatta as Executive Vice Chairman of the Nigerian Communications Commission (NCC). He will be serving another 5 years as the Chief Executive Officer of the Commission, a statement from @FMoCDENigeria.
— Bashir Ahmad (@BashirAhmaad) June 5, 2020
This reappointment was based on the recommendations of the Honourable Minister of Communications and Digital Economy, Dr Ali Ibrahim Pantami, and contained in a Press statement from the ministry.
While wishing him well in his second tenure, Pantami urged Professor Danbatta to consolidate on gains and achievements of his first term.
“The honourable minister directed him to significantly improve on the overall performance of the commission as well as ensure that adequate mechanisms are put in place to facilitate the implementation of all policies of the Federal Government through the ministry” the statement read.
Download the Nairametrics News App
The professor of Telecommunications engineering had lectured for about three decades before his previous appointments. At different times, he also served as a member of the Implementation Committee of the Northwest University Kano, as well as served as the Acting Vice-Chancellor of the Kano University of Science & Technology, Wudil.
CBN debits banks another N459.7 billion for failure to meet CRR target
Sadly, this move, in addition to similar policies by the CBN, has left many banks cash-strapped and unable to pursue various profitable ventures.
The Central Bank of Nigeria (CBN) has debited twenty-six banks, including merchant banks, to the tune of N459.7 billion for failure to meet their CRR (Cash Reserve Ratio) obligations. The fresh debit, which Nairametrics reliably gathered occurred yesterday, has left many stakeholders in the banking sector very upset.
The details: Among the banks that were most affected are United Bank for Africa Plc (N82.3 billion), First Bank of Nigeria Ltd (N59.3), Zenith Bank Plc (N50 billion), First City Monument Bank (FCMB) Limited (N45 billion), and Guaranty Trust Bank Plc (N40 billion). The rest of the affected banks can be seen in the table below.
Note that the latest CRR debits are coming barely one month after a lot of banks were collectively debited to the tune of N1.4 trillion for the same reason in April. Between then and now, a lot of other minor CRR debits have occurred. Nairametrics understands that the apex bank now debits banks on a weekly basis.
Some backstory: During the CBN’s Monetary Policy Committee (MPC) meeting that was held last month, committee members voted to retain CRR rate at 27.5%. The rate was increased in January this year from 5% to its current level after the apex bank cited inflationary pressure concerns. What this means, therefore, is that Nigerian banks are required to keep 27.5% of their deposits as CRR with the Central Bank of Nigeria.
Download the Nairametrics News App
But banks are silently upset: Sadly, this move, in addition to similar policies by the CBN, has left many banks cash-strapped and unable to pursue various profitable ventures. While reacting to the latest development, a banker who refused to be identified, said:
“What we’ve seen in recent times is that the CBN just indiscriminately debits banks, usually towards the stale-end of every week. They will look at your bank account and if your liquidity is plenty, they will debit you.
“You know the central bank also does what we call retail FX intervention, that is when they sell FX to corporates. Now, because they don’t want banks coming with huge demands, what they do is that a day before the FX sales, they debit the banks so that the naira you have available is small and you cannot put them under pressure because of your FX demands. That has really been the driver.
“We understand that the central bank had set up a special CRR team that is supposed to monitor banks’ CRR once a month. But now, the team monitors banks’ CRR on a weekly basis. This is why the central bank is effectively debiting banks on a weekly basis. Some weeks ago, they debited some banks about N1.4 trillion. That was one of many. Between that time and now, there have been more debits that have happened. But the debits that are huge/significant are what is troubling the banks. There was a N300 billion that happened about two weeks ago. and then yesterday that was this N459.7 billion that was also debited.
“These are huge amounts that are leaving the banking sector. It’s a squeeze on the banks. A bank like First Bank, for instance, has about N1.4 trillion in CRR with the Central Bank. And there is Zenith Bank with equally as much as N1.5 trillion. These are monies that banks can potentially put in loans at 52% at 30%, or even put in money market instruments at maybe 10%. So, for a shareholder of these banks, this CRR debits are impairing the banks’ ability to increase their earnings because now are not able to use the funds that are legitimately theirs to create money for their shareholders. And the question is that under what framework is the Central Bank choosing to take people’s money?”