South Africa’s MTN Group says its Nigerian subsidiary could report an annual profit of $955 million after tax, a statement confirming a newspaper report in the country.
“Profit after tax figure for MTN Nigeria for the period ended 31 December 2015 being quoted in the press article, is 190 billion naira ($955 million), which is within the current estimate,” the company said in a statement.
The telecommunications giant is facing a $5.2 billion fine in Nigeria for failing to disconnect some 5.2 million unregistered lines as directed by regulator Nigerian Communications Commission (NCC). It last year filed a suit before a Federal High Court challenging the powers of NCC to hand out the fine, which is more than its expected total profit for 2015. MTN makes 37 percent of its revenue from Nigeria.
The NCC had approached the court to stop MTN from moving funds abroad after it had failed to convince the court to throw out the telco’s case. The South African company had been a subject of suspected ‘tax evasion’ via Transfer Pricing in the past. Normally, MTN would be expected to pay up its fine using its liquid assets. However, its profit after tax for 2014 and 2015 will not be enough to pay the penalty even if the court orders it to pay. The company made a profit of $1.05 billion in 2014.
The Nigerian regulator had earlier reduced the $5.2 billion to $3.9 billion with a deadline of Dec. 31, 2015 for payment, regardless of MTN’s court challenge. But having failed to meet the deadline, the telco will now have to pay the initial fine.
MTN whose shares were plunging on the Nigerian fine recovered, Monday, following news that sanctions against Iran, where 21 percent of its subscriber base is from, have been lifted. According to Reuters, by 08:58 GMT, the stock was up 2.22 percent at R120.88.