MTN is Finding it Difficult to Repay its Loans to Nigerian Banks over Dollar Shortage

Telecommunications giant, MTN Group Ltd., may be having some difficulty repaying about $500 million of debt held in Nigeria, after it said that it can’t get hold of dollars in the African wireless carrier’s biggest market.

Nik Kershaw, head of investor relations, on Monday said the telecoms outfit had looked to do an early resettlement of the loans but is currently unable to do so as a result of the limited availability of the hard currency in the country.

The central bank of Nigeria has been implementing stringent forex control measures in a bid to shore up the naira.

MTN, which has more than 230 million mobile-phone customers in 22 countries, said Aug. 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.

Declines in emerging market currencies against the dollar, including the South African rand, will hurt the business, Kershaw said. The cost of importing handsets into South Africa could rise, for example, with the difference to be passed onto the consumer.

“If the handset pricing goes up because the currency weakens, it’s going to cost the consumer more,” Kershaw said.

“When we do the next budget cycle we’ll review that,” he said. “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.”


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