Risk analysis firm, Moody’s, may ‘downgrade’ MTN amidst fresh Nigeria fines

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Research and risk analysis firm, Moody’s, has placed MTN Group on a review for downgrade following the recent fines imposed on the South African mobile phone operator by Nigerian authorities.


The telecoms operator has in the last one week been slammed with about $10.1 billion fine by regulators from its biggest and now most problematic market, Nigeria.

On Tuesday, the Nigerian government slammed the firm with a $2 billion tax demand.

The new tax bill, incurred by the telecom firm over the last decade, came after the firm had been directed to return $8.1 billion the Nigerian apex bank claimed it illegally sent abroad with the collusion of four banks.

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MTN said it had been in talks with Nigeria’s Attorney-General, Abubakar Malami, over concerns around tax compliance, but it was billed all the same, for the importation of foreign equipment and payments to foreign suppliers.

Moody’s said the telecom firm would be placed on review amid the uncertainty that surrounds its operations in Nigeria and South Africa where its shares slumped earlier in the week. MTN debt stands at around 57 billion rand ($3.7 billion).

“MTN’s ratings have been placed on review for downgrade to reflect the uncertainty around the potential implications of the recent CBN (Central Bank of Nigeria) and NAG (Nigerian Attorney General) announcements on MTN’s credit profile,” Moody’s said Thursday.

Moody’s, a global risk assessment firm, provides financial intelligence and analytical tools to evaluate growth, efficiency and risk management objectives of companies.

The risk evaluation firm already has a ‘junk rating’ on MTN debt at Ba1. A junk rating can set off a wave of capital outflows because it automatically excludes bonds from certain high-profile indexes.

It, however, noted that without the demand for the refund and the potential tax shortfall, MTN would be able to repay approaching debt maturities over the next 12 to 18 months.