MTN ‘expects’ CBN to devalue the naira
MTN group says it expects the Central Bank of Nigeria (CBN) to devalue the naira within the 230 to 240 band.
According to Reuters is reporting, Brett Goschen, speaking through MTN’s chief financial officer, said the company expects a 22-percent devaluation at some point this year.
With the naira currently trading at 197 against the dollar, the Nigerian government has insisted it would not devalue the naira despite depletion of the nation’s foreign reserves.
MTN is not the first corporate entity to forecast the devaluation of the naira, as Diamond Bank did the same in its 2016 business outlook.
“With lower oil prices to persist and its implications on foreign reserves, further naira devaluation of 15 percent minimum is anticipated in 2016 at the official market,” the bank said.
WHAT DEVALUATION MEANS FOR NCC FINE
Africa’s biggest wireless operator has been in talks with Nigerian government and the Nigerian Communication Commission (NCC) to reduce the N780 billion ($3.9 billion) fine imposed in October 2015.
A devaluation of the naira would mean a reduction in the value of MTN’s N780 billion fine, if the company pays in dollars.
At N200 per dollar, MTN’s fine is $3.9 billion, but a devaluation of the naira to 240, would automatically reduce MTN’s fine to $3.25 billion.
On the flip side, if MTN is compelled to pay in Naira, at N200 per dollar, it would be paying N780 billion, while at the devalued rate of N240 per dollar, MTN would have to pay N936 billion.
FINE CLARIFICATION IN 2015 FY RESULTS
MTN, in its fiscal year final results for 2015, made it clear that the R9.287 billion (N120 billion) set aside for MTN fine is in accordance with its principle of prudence.
“The Management of MTN Nigeria has clarified that the R9287 million set aside in the recently released MTN Group Financial results is in accordance with the Principle of Prudence in generally accepted accounting standards,” MTN Nigeria said.
“This requires that reasonable provisions be made for contingent liabilities. Discussions with the Nigerian authorities are still ongoing and stakeholders will be advised accordingly when a settlement is reached.”
Also, Amina Oyagbola, MTN executive, said: “MTN’s auditors have required that the company make a provision in line with the International Financial Reporting Standards (IFRS).”
Her statement buttresses the same point made by the, Phuthuma Nhleko, its executive chairman, in the 2015 results published earlier today.
Keep waiting you don’t know who Buhari is. He say he won’t devalue and he will not devalue.
Didn’t Buhari say he will not remove fuel subsidy? But he did. The Naira is already devalued, Buhari is simply subsidising the Naira for the Limited number of businesses and individuals who have access to official rates.