MTN SHARE PRICE FALLS ON POSSIBLE REVIEW OF NIGERIAN TAX HOLIDAY

Mergers, Acquisitions and Financial Results

Shares in Africa’s biggest mobile operator by sales, MTN, tumbled more than 5 per cent after reports that the Nigerian government was considering reviewing its tax holiday.

MTN, South Africa’s second biggest mobile operator and number one in Nigeria, fell to an intraday low of 45.50 rand before clawing back some ground to close down 3.09 per cent at 47 rand. The JSE top 40 index ended down 0.44 per cent.

Analysts in Johannesburg said there were unconfirmed reports of a tax move from other analysts travelling with MTN in Nigeria. "There’s about 25 analysts travelling with MTN, and the news coming out is not positive. MTN is making so much money in Nigeria, and the government is reviewing the tax break granted when MTN went there," a Johannesburg analyst told Reuters.

He said there might even be discussions between MTN and the government of Nigeria over the issue. "I personally think it may be in their (MTN’s) interest to engage the Nigerians," the analyst said.

MTN has not paid any tax in Nigeria since entering the market in 2001 as part of a government incentive for investing. A possible review of the so-called pioneer status awarded to companies that established Nigeria's first cellular services was mentioned in a meeting with a regulatory body.

The company confirmed only that it had been awarded a five-year tax holiday and did not say whether that tax status was in doubt for the future. "The pioneer status was granted to MTN, like other large investors in Nigeria, for a period of five years.

The concession has given MTN an opportunity to increase its investment and infrastructure rollout," MTN executive Yvonne Muthien said in a statement in response to a question from Reuters.

In September last year, Nigeria’s This Day newspaper reported that the state of Lagos had passed a law to levy fees on cellular operators based on locations and height of base stations. The paper estimated the additional costs for the companies at 5 billion rand ($857.9 million) each.

MTN is the leading cellular operator in Africa’s biggest telecoms market with 3.89 million subscribers, accounting for 61 percent of the market. Last month the company raised its full-year target for Nigeria to 4.3 million subscribers from an initial goal of 4 million.

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