South Africa will not meet Nigerian authorities on behalf of MTN Group Ltd., Africa’s biggest mobile telecommunications company over a $5.2 billion fine the Johannesburg headquartered company faces in Nigeria.
South African Deputy President Cyril Ramaphosa who is also a former chairman of MTN said on Wednesday that companies from the country must follow the rules in countries where they do business.
“We will obviously be taking note of what is happening with a view of seeing how the company involved responds and reacts in this matter,” Ramaphosa told lawmakers in Cape Town, the country’s legislative capital. “We would like our companies to comply with the laws and regulations of countries where they operate, without violating those.”
Already, MTN is working towards having the penalty reduced but the development is taking a toll on the company’s shares which have slumped 14 percent since October 26, when the Nigeria Communications Commission (NCC) imposed the fine. The regulator had said MTN failed to disconnect customers with unregistered sim cards.
While he admits that the penalty imposed on MTN in its biggest market will affect South Africa, Ramaphosa hints that the government would just sit and watch.
A political analyst who advises BNP Paribas Cadiz Securities, Nic Borain, is not surprised by the Deputy President’s statement. “South Africa does not have a track record of defending its national company champions internationally,” he told Bloomberg by phone.
“On the face of it, this fine seems seriously over the top. Ramaphosa’s words about the issue seem weak as they veer too much on the side of caution.”
MTN has until November 16 to pay the NCC a fine of $5.2 billion to the Nigerian regulator.