Ripples of the Central Bank of Nigeria’s (CBN) policies around dollar issuance amidst other monetary policies seem to have started reverberating, as MTN Group claims it cannot get foreign exchange to pay its debt in Nigeria.
A report on Bloomberg, yesterday, claimed that MTN Group has abandoned plans to repay early about $500 million debt held in Nigeria, saying it can’t get hold of dollars in the African wireless carrier’s biggest market.
MTN’s Head of Investor Relations, Nik Kershaw, was quoted as saying: “We had looked to do the early resettlement but currently, we are not able to. In Nigeria, there is limited availability of the hard currency.”
MTN, which has more than 230 million mobile-phone customers in 22 countries, said on August 5, it was in talks with Nigeria’s Central Bank about the early repayment of borrowings to reduce exposure to the naira, which has weakened against the U.S. dollar this year.
According to Kershaw, declines in emerging market currencies against the dollar, including the South African rand, will hurt the business.
For example, he noted that the cost of importing handsets into South Africa could rise, with the difference to be passed onto the consumer.
Kershaw said MTN, which has 62 million subscribers in Nigeria and controls 43 per cent market share, would take time to consider how to respond to the rand’s weakness in terms of cost controls and investment plans, adding: “When we do the next budget cycle, we’ll review that. We’re not going to have a short-term knee jerk reaction to the currency moving. You need to see how things play out over the next couple of months.”
Recalled that about four years ago, MTN Nigeria got $3 billion loan from consortium of local and international financial institutions to enable it further expand, modernise and improve its network infrastructure. Network vendors, including Ericsson and Huawei, handled it.
