MTN fine is a ‘shake down’

MTN has been the victim of a “shake down” by Nigerian regulators who fined the phone company $5.2 billion says Wells Fargo & Co.

Johannesburg - MTN Group has been the victim of a “shake down” by Nigerian regulators who fined the phone company $5.2 billion and this has “seriously negative investment implications” for the country, according to Derrick Irwin, manager of a $3.5 billion emerging markets fund at Wells Fargo & Co.

The Nigerian Communications Commission imposed the penalty on Johannesburg-based MTN for failing to meet a deadline to disconnect 5.1 million unregistered subscribers.

MTN’s shares have lost about a fifth of their value since the fine was made public on October 26, while CEO Sifiso Dabengwa announced his resignation on Monday.

The fine “is outrageous by any rational stretch of punishing the company,” said Boston-based Irwin, manager of the Wells Fargo Advantage Emerging Markets Equity Fund, which held MTN stock as of August. 31, according to data compiled by Bloomberg.

“If you can shake down MTN, you can shake down anybody.”

The Nigerian government is looking for sources of revenue to plug holes in the budget and this may be a reason for the severity of the fine, Irwin said. Africa’s biggest crude producer has struggled to deal with falling oil prices and the cost of battling an Islamist insurgency in the country’s northeast.

BLOOMBERG