MTN Nigeria’s loss could be Naira’s gain
JOHANNESBURG, (CAJ News) – THE Naira, Nigeria’s currency, is poised to benefit from the hefty fine South Africa’s MTN Group has been ordered to pay after its Nigerian entity was found on the wrong side of the law.
MTN Nigeria has been fined a landmark US$5,2 billion after it failed to disconnect millions of subscribers that had failed to register with the operator as directed by the Nigeria Communications Commission.
With MTN given two weeks to pay the fine, Rand Merchant Bank, an international markets think-tank, projected the bulk of the fine could come from the Headquarters in South Africa.
“Having looked at the situation we can make the following rough statements about the currency impact,” RMB stated on Tuesday.
“First, it could result in some outflows from SA if the group holding company transfers cash across to the subsidiary,” RMB continued.
It said at the very maximum, this could be US$1 billion but in all probability would be much smaller.
“In other words it could be a big deal for the rand but probably will not. Secondly, there could be huge inflows into Nigeria: we estimate the final fine size minus US$ 1 billion which implies US$4 billion if the current fine stands. This is a big deal for the naira.”
This is seen as a major boost for the Naira, which has been battling pressure from the US currency over the months.
Meanwhile, a cloud of uncertainty shrouds MTN after the landmark fine imposed in Nigeria.
– CAJ News
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